Hang Lung Properties has been given the green light to build luxury homes on a former US government site on Hong Kong’s Shouson Hill, according to a recent report by the city’s Buildings Department, with analysts predicting that the villa project will be worth as much as HK$5 billion ($637 million) upon completion.
The 47,296 square foot (4,394 square metre) luxury development will be built on a site which was once home to a set of residences owned by the US consulate in the city, and will comprise five detached homes covering about 9,459 square feet each, according to the approved plan.
Hang Lung sees the project on the south side of Hong Kong island as an opportunity to profit from strong demand in the luxury market, where the company’s chairman, Ronnie Chan sees buyers from north of the SAR’s borders driving high-end home sales. “The last time I saw so many wealthy mainlanders arrive in Hong Kong was probably in the early 1950s due to political changes up north,” Chan said in announcing the developer’s interim results in September.
Despite Chan’s enthusiasm, property analysts see challenges even for elite home sales with a recent report by Savills forecasting that luxury residential values are “likely to correct by 10 percent over 2022, and to decline by a further 5 to 10 percent over 2023,” as greater economic uncertainty and rising interest rates make buyers more cautious.
Shouson Hill Mansions
“(37 Shouson Hill Road) will be redeveloped into luxurious detached houses and is now in the planning stage,” said Hang Lung in its 2022 interim report. “Each home in the project could sell for as much as HK$100,000 per square foot,” said Colliers’ senior director and head of research Kathy Lee.
Located in a neighbourhood close to the residences of Hong Kong billionaires including CK Asset’s Li Ka-Shing and Alibaba’s Joe Tsai, each of the five homes in Hang Lung’s residential project would span three storeys atop a basement level.
New homes covering around 10,000 square feet of area are considered prestigious and rare, said Alex Leung, senior director at CHFT Advisory and Appraisal. Houses on 37 Shouson Hill Road will enjoy views of the city’s Deep Water Bay, which is the main selling point of the project, he said.
Comparable homes in Shouson Hill and Repulse Bay sell for around HK$80,000 to $110,000 per square foot of saleable area, according to Norry Lee, JLL’s senior director of projects strategy and consultancy department.
The developer’s land parcel on Shouson Hill, which was one of the US government’s most valuable assets in the city, is about a 5 minute drive from the Ocean Park MTR station, and about 2 minutes by car from Emperor International’s luxury villa project at 15 Shouson Hill.
While Hang Lung looks set to move forward with the luxury development, the early days of the project showed slower progress as the developer’s purchase of the site hit some early resistance from the mainland government.
Hang Lung initially purchased the nearly 95,000 square foot parcel from the US government in September of 2020 for HK$2.6 billion, but that transaction was blocked by China’s central government just three months after the sale was agreed to, on the grounds that that the US Consulate General in Hong Kong needed to seek approval from Beijing before signing the deal.
According to its interim report released last month , Hang Lung succeeded in completing its acquisition of the site in February last year.
Despite an economic downturn and a slump in mass housing market Hong Kong continued to witness landmark luxury housing deals during the third quarter, according to a Savills report last month. Among the high-end transactions was the HK$430 million sale of House 3B at Wheelock’s Gough Hill Residences in August.
In July, one of the 15 luxury villas at Deep Water Bay’s No. 15 Shouson – jointly developed by CC Land, Emperor International, CSI Properties Ltd and Mingfa Group – was sold for HK$435 million to an unnamed buyer. During June, another unnamed buyer purchased a detached home at the same project for HK$870.2 million, which marked the city’s priciest residential transaction this year.
Mingfa agreed in September to sell its 20 percent stake in No.15 Shouson to CC Land and Emperor International for HK$650 million.