HKRI Selling Sheung Wan Office Space for Record $96M

Developer Hong Kong Resorts International (HKRI) has sold the entire 22nd floor of China Merchants Tower in Hong Kong’s Shun Tak Centre for HK$750 million ($95.9 million). The transaction, which values the office space at nearly HK$31,000 ($3,962) per square foot, is the city’s biggest-ticket strata-titled office deal to date.

A unit of HKRI sold the 24,200 square foot (2,248 square metre) floor of the grade A office tower in Hong Kong’s Sheung Wan area just west of Central, to an investment holding company. HKRI expects to record a net gain of HK$550 million ($70.3 million) from the deal, according to an announcement to the Hong Kong stock exchange.

Office Floor Sees Nine-Fold Appreciation since 2002

“With the favourable investment and property market conditions, Directors are of the view that the Disposal represents a good opportunity for the Group to realise its investment in the Property at attractive return. The Disposal will increase the working capital of the Group and enhance its cashflow,” stated HKRI in the announcement.

The developer made the sale possible by relocating some employees from its head office in the tower to the CDW Building in the New Territories’ Tsuen Wan district, leaving the floor vacant. HKRI, which owns the CDW Building, continues to occupy the 23rd floor of China Merchants Tower.

Completed in 1985, the 40-storey tower at 168-200 Connaught Road Central is located on Hong Kong’s harbour front near the Sheung Wan MTR Station and was formerly known as Tower 1 of Shun Tak Centre. The mixed-use complex includes a twin office tower and a four-storey retail podium and doubles as the Macau ferry terminal.

HKRI, which is best known for having developed Discovery Bay on Lantau island, picked up the Shun Tak Centre space for HK$74.4 million in 2002. The developer expects to generate a profit of HK$675.6 million ($86.4 million) from having held the asset for 15 years, according to an account in the Hong Kong Economic Times.

HKRI is selling the space to Blue Sapphire Global Limited, a holding company incorporated in the British Virgin Islands. The sale is scheduled to be completed on or before November 30.

Sheung Wan Deal Surpasses Central Sales

The transaction price per square foot approaches a record high in Sheung Wan. Local developer Hip Shing Hong or its affiliates achieved the all-time high by purchasing the full 34th floor of Cosco Tower for HK$638 million ($82 million), as reported by international property agency Colliers in May. The 20,506 square foot (1,905 square metre) space at 183 Queen’s Road Central changed hands for HK$31,113 ($4,000) per square foot.

Even loftier prices have been set elsewhere in Hong Kong as the office investment fever spreads to strata-titled sales. Mainland shopping mall developer Joy City Property sold the full 11th floor of World-Wide House, a grade A office tower adjacent to Central station, in June for HK$601 million ($77 million), equating to a price of HK$36,003 ($4,616) per square foot.