
China Southern Airlines is looking for a buyer for the top four floors of 118 Connaught Road West
China Southern Airlines is reportedly putting up for sale a four-storey office space in a waterfront building in Hong Kong’s Sai Ying Pun area, with hopes for a HK$1 billion ($130 million) payday, according to a report in the Hong Kong Economic times
The Hong Kong-listed carrier is looking for a buyer for the 53,060 square foot (4,929 square metre) set of floors at 118 Connaught West Road, which are currently leased out for an average unit price of HK$38 to HK$40 per square foot per month.
Known for its spotty record with regards to timing, China Southern might need to be prepared for a slight delay in its sales plan, however, as its hoped for sale is attempting to take off in what seems to be rough weather for commercial real estate in Hong Kong after transactions of office assets in Hong Kong fell by 76 percent during the third quarter, compared to the previous three months.
China Southern Pushes Waterfront Asset
The Guangzhou-based carrier is putting up for sale the top four floors of the 40-storey office building, with each floor measuring approximately 13,265 square feet. Along with the office space, China Southern is also selling 18 car parking spots in the building at the corner of Connaught Road and Wilmer Street in the up-and-coming section of Hong Kong island’s western area.

China Southern may have encountered some unexpected conditions with its latest plans
According to a source cited in the local news account, China Southern Airlines bought the top six floors in 118 Connaught West Road in 1994 when the building was just finished, and had previously sold the lower two floors in the set. The remaining top four floors, which enjoy a view of Victoria Harbour, are expected to sell for at least HK$19,000 per square foot. Along with the 18 parking spots, the property could bring in approximately HK$1 billion for the state-run enterprise.
According to Hong Kong real estate website primeoffice.com, 118 Connaught Road West, which is about a three minute walk from the Sai Ying Pun MTR station, is primarily occupied by trading companies. According to the website, a 1,023 square foot office in a high floor of the building sold recently for HK$17 million, or around HK$16,617 per square foot.
Mainland Airline Misses Market Timing
China Southern, whose flights have one of the worst punctuality ratings of any major airline globally with just 64 percent of journeys arriving on time, appears to be taking off a bit late with its attempt to sell its Hong Kong commercial asset.
While transactions of Hong Kong commercial real estate assets valued at HK$100 million or more jumped by 136 percent during the second quarter of 2018, helping to bring the overall volume of commercial transactions in the first six months of the year to nearly HK$86 billion, during the third quarter activity dropped sharply.
Real estate deals in Asia’s priciest city fell to HK$16.33 billion ($2.08 billion) in the period from July through September, down 65.8 percent from the three months which ended on June 30th, and off more than 50 percent compared to the same period last year, according to a report released last month by property consultancy Cushman & Wakefield.
Many analysts have attributed the slow-down to concerns over a US-China trade war as well as to rising interest rates.
Just last month Chen Chang Wei’s Hengli Group is said to have sold a 65 percent stake in its acquisition of Swire Properties Cityplaza Three and Four after the mainland tycoon was reportedly unable to secure mezzanine financing for its HK$15 billion buyout of the Taikoo Shing office towers. Hengli’s June buyout of the 1990’s vintage towers ranked as the largest investment deal in Hong Kong during the second quarter.
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