Tung Chee-Hwa Family Buys Pair of Floors in The Center for HK$1.3B

Sales of Hong Kong office space are on the way up, but at prices well below pre-COVID rates, as members of one of the city’s richest families recently picked up a pair of floors in Central at around 20 percent less than what the building had traded for when it was acquired for a record $5.2 billion in late 2017.

A pair of companies registered to family members of former Hong Kong chief executive Tung Chee-Hwa in July purchased the 20^th and 25^th floors in the Center, according to public records, with the heirs to the $5.9 billion Orient Overseas Lines fortune paying a combined HK$1.3 billion ($167 million) to acquire the prime office space in separate transactions, which were first reported by local news provider Oriental Daily.

The sellers are veteran investors David Chan Ping-chi and Ma Ah-muk, who were members of a local consortium who banded together four years ago to purchase the 73-storey building from CK Asset Holdings in the hopes of selling off the Central landmark piece by piece for a quick profit.

Since that time the group of speculators has been trapped by a market downturn that has forced some of them to wait through years of restricted capital flows from the mainland, social unrest and the COVID-19 pandemic to be able to exit the ill-timed deal.

Mid-Zone, Low Price

According to public records, Topworld Union Enterprise Ltd, a private company which holds the 25^th floor of the Center, is controlled by a company whose directors include Audrey Lieh Yuan Slighton Tung (董立筠), Andrew Lieh Cheung Tung (董立均) and Alan Lieh Sing Tung (董立新). All three directors are children of Tung Chee Hwa, while the 20^th floor is registered to a company controlled by Alan Lieh Sing Tung and long-time Orient Overseas director Yao Erxin ( 姚爾欣).

Topworld paid HK$674 million for the 25^th floor of the Center, according to local media reports, purchasing that asset from David Chan, an industrialist turned investor known as the King of Cassettes, who had picked up nine floors in the Center as a member of the original buyer consortium.

Alan Lieh Sing Tung paid a reported HK$630 million to purchase the 20^th floor from Ma Ah-muk, an investor known as the Minibus King, due to his ownership of local transport firm Koon Wing Motors. With both floors measuring 24,980 square feet (2,320 square metres), at the reported price, the Tung family paid just less than HK$27,000 per square foot for the 25^th floor and HK$25,220 per square foot for the 20^th level.

In an interview in July, when both disposals reportedly took place, David Chan told local news site HK01 that he had sold the 25^th floor at a slight profit after cutting the asking price by 13 percent to seal the deal. With the 2017 sale of the Center taking place at an average of HK$33,000 per square foot, the 25^th floor changed hands at around 18 percent less than that rate with the 20^th floor being sold at around 24 percent below that par.

Chan and Ma sold off their floors in the Center as Hong Kong experiences a revival in strata office transactions during 2021, with a recovering economy boosting investor confidence and low interest rates facilitating financing. In the period from January through the end of July, some 17 strata office deals worth HK$100 million or more were recorded in Hong Kong, according to property agency Midland IC&I, with that seven month total surpassing the volume recorded in all of 2020.

Speculators Sweat It Out

The sales of the floors in the Center are the latest in a series of disposals for participants in the Center consortium, who have struggled to exit from the deal after having financed their acquisition with bonds yielding as much as 15.25 percent.

In October last year Chan had sold the 48^th floor of the Center for just less than HK$38,140 per square foot to a unit of Hopson Development Holdings, after selling a stake in a set of units on the 42^nd floor for a reported HK$27,100 per square foot during August of 2020. In early 2019, before Hong Kong was struck by months of unrest, the recording tape magnate had sold the 38^th floor in the Center to an unnamed mainland investor for around HK$42,000 per square foot.

In August, Shimao Holdings opened a serviced office facility on the 76^th floor of the Center, after the company’s chairman, Hui Wing Mao, had played a lead role in buying out the building. Ma, the Minibus King, who had purchased 13 floors in the Center, by late last year was rushing sales of assets in what some analysts termed motivated transactions.