Champion REIT Looks to Sell Langham Place Office Tower as HK Market Surges

Champion REIT, a listed trust sponsored by Hong Kong developer Great Eagle, is testing buyer interest in the HK$8.5 billion ($1.1 billion) Langham Place office tower in Mong Kok, as a flurry of major deals drives record-high property values in the city.

“The REIT Manager wishes to explore the Possible Disposal in light of the current favourable commercial property market environment in Hong Kong,” the trust said in a statement filed yesterday with the Hong Kong stock exchange.

International property consultancy Savills has been appointed to market the building on behalf of Champion REIT.

REIT Could Offload a Fully Occupied Skyscraper at a Market Peak

Champion REIT bought the Langham Place Office Tower from Great Eagle in 2008 and owns all but four floors. The 59-storey, Grade A office building spans about 703,000 square feet of gross floor area, and was fully occupied as of the end of last year.

The office tower forms part of the mixed-use Langham Place commercial development completed in 2004. The adjoining Langham Place Mall is a 15-storey, 590,000 square foot retail property also owned by Champion REIT. Within the same complex is the Cordis Hotel, a 42-storey four-star hotel owned and operated by Langham Hospitality Investments, a subsidiary of Great Eagle Holdings Limited.

The complex is located at the intersection of Argyle Street and Shanghai Street in the bustling Mong Kok area of Kowloon, known for being one of the most densely populated areas on earth, and is connected to the Mong Kok MTR station, a major transportation hub. Great Eagle partnered with Hong Kong’s Urban Renewal Authority to build the project in an effort to redevelop the downscale area.

The office tower accounts for 24 percent of the total gross floor area of Champion REIT’s assets under management, and had a property income of around HK$295 million ($38 million) last year, representing 14.6 percent of the REIT’s total net property income. The tower was valued at HK$8.5 billion at the end of 2016.

In addition to the Langham Place Office Tower and the Langham Place Mall, Champion REIT owns Three Garden Road, a more than 1.6 million square foot complex consisting of two office towers and a retail podium in Central.

Sensing an Opportune Time to Sell

Champion REIT is joining an array of Hong Kong players who are looking to cash in on a frothy commercial market, as surging investor demand drives ever-higher property prices in the city.

In a series of deals this past February and March, New World Development paid a total of HK$11.8 billion ($1.5 billion) for a pair of commercial sites in the West Kowloon neighbourhood of Cheung Sha Wan, several kilometres northwest of Mong Kok. The total price equates to HK$7,696 per square foot of future commercial space.

Also in Cheung Sha Wan in west Kowloon, homegrown developer Hanison is seeking to auction off a newly renovated 23-storey office building, with a tentative asking price of HK$1.72 billion ($222 million), or HK$11,830 per square foot.

In May, Henderson Land Development smashed records when it scooped up the Murray Road car park site in the city’s Central district, where it will build a landmark commercial project, for HK$23.3 billion ($3 billion). The deal marked the largest property transaction in the city to date and also the most expensive at HK$50,064 per square foot.

This highly liquid market means landmark hotels are up for grabs too. Last month, Jardines-owned Mandarin Oriental Hotel group announced that it was reviewing options for the sale of the Excelsior Hotel in the city’s Causeway Bay district. The sale of the luxury waterfront property could bring in as much as HK$27 billion ($3.4 billion), according to estimates.