CSI Properties Sells New Territories Retail Podium for $56M

CSI Properties has agreed to sell the retail podium of its residential tower in the New Territories for HK$440 million ($56 million), an executive from the Hong Kong-listed developer confirmed to Mingtiandi.

The unnamed buyer – a local family office, according to sources familiar with the deal – is paying about HK$35,558 per square foot to acquire the three-storey retail segment of COO Residence, which covers 12,374 square feet (1,149 square metres) in the project 8 Kai Fat Path in Tuen Mun. 

“(The group has) maintained a solid financial position through steady asset disposals on both the residential and commercial fronts, to continue to strengthen its liquidity,” said CSI in its 2022 annual report. In the year ended 31 March, its ratio of total debt to total assets was 39 percent, which was down from 41.7 percent during the same period of last year. 

With the company first having put the asset on the market one year ago, the deal was signed about a month before the developer issued a profit warning to shareholders on Monday this week. In that notice, CSI said, based on unaudited numbers, it expects its consolidated profit attributable to owners of the company for the six months ended 30 September to decline by 50 percent compared to the same period a year earlier. 

Compared to its stated market value in March 2021 of HK$720 million, the price for the COO Residence podium also fell about 38 percent over the past year and a half.

Offloading in Tuen Mun

Completed in 2019, the COO Residence podium includes the basement, ground and first floors of the building, according to the developer’s website, and is home to restaurants, convenience stores and financial institutions including the Nanyang Commercial Bank, according to local media reports. The property, which is located next to the Tuen Mun West Rail station, has a total monthly income of HK$1.4 million which would give the buyer a yield of 3.7 percent on the acquisition.

“Tuen Mun retail has always been stable with businesses serving the local communities,” said Simon Kan, executive director and chief operating officer at CSI Properties. “Rental yields are therefore stable, with upside potential given the increasing trend of average household income.” 

In comparison, the average asking price for strata units in the retail podium of The Parkville, a similar property in Tuen Mun being marketed by Wang On Properties and a company controlled by a son of CK Asset executive director Justin Chiu, is about HK$29,800 per square foot, providing a 2.86 percent rental yield, said Alex Leung, senior director at CHFT Advisory and Appraisal.

Neighbourhood Malls

While trades of retail assets in Hong Kong have declined over the past twelve months, the city continued to see transactions of neighbourhood shopping centre properties from the beginning of the year. In September, Fairland Holdings – known for its suburban developments in Yuen Long and Tai Po – acquired Horae Plaza, a neighbourhood shopping centre in the urban renewal hotbed of To Kwa Wan for HK$425 million.

The developer plans to upgrade the property to serve the growing community west of the former Kai Tak airport, and estimates a rental yield of more than 4 percent for the 1998-vintage shopping mall.

Two months before that purchase, local giant New World Development was said to be asking potential buyers for HK$6 billion for the D Park shopping centre, which is part of the Discovery Park project on Castle Peak Road in Tsuen Wan.

In January, the family of Hong Kong’s late “Shop King” Tang Shing-Bor offloaded the retail podium of the Indi Home tower, which is about a 25 minutes’ drive from the COO Residence, for HK$650 million.