The nearly completed residential project in Ho Man Tin sold for HK$920 million
Hong Kong-listed mainland property developer Fullsun International has agreed to purchase a residential project in Ho Man Tin, an upmarket residential area in central Kowloon, for HK$920 million ($117 million), according to a filing to Hong Kong Stock Exchange.
The Fuzhou-based developer, which gained a listing on the Hong Kong exchange in January via a reverse merger, has chosen a 78-unit condo development in Ho Man Tin for its first high profile cross-border investment, purchasing the site from local developer Easyknit Group, which started redeveloping the 8,060 square foot (749 square metre) plot in 2014.
Fullsun International’s parent company Fusheng Group has property businesses in ten cities across China, including Shenzhen, Zhengzhou and Tianjin. Since 2015, the group has acquired over 70 projects with a combined land area of 16.8 million square metres in cities like Shenzhen, Guangzhou and Wuhan, according to local media reports.
Mainland Developers Not Yet Done in Hong Kong
The project acquisition by Fullsun, comes as mainland developers have been scaling back their purchases of Hong Kong real estate during the past 12 months, after dominating land deals in the territory during 2016 and early 2017. From last April to January, mainland developers purchased only 11 percent of the land sold via government tenders, down from as high as 53 percent in the previous fiscal year, according to an S&P Global Ratings Report cited by Bloomberg.
However, analysts do not think the deal necessarily signals a comeback for mainland developers’ acquisitions in Hong Kong. “The deal in Ho Man Tin is an isolated case because it is a relatively small-scale project. The sum of HK$920 million is also relatively small compared to previous land acquisitions by mainland developers in the past years that were worth billions,” said David Ji, Head of Research & Consultancy for Greater China at Knight Frank, during a phone interview with Mingtiandi.
However, the market expert left open the possibility that investors from north of the border might continue to play an outsized role in competing for the city’s limited sites. “It is still an early stage to tell whether more developers from the mainland will be active in the city this year. It depends on the investment opportunities available and appropriate timing for investors,” Ji added.
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Despite any regional trend, Changsha-based Fullsun sees its Kowloon acquisition as an attractive opportunity.
“With reference to the property market statistics, the management expects that the demand continues to outpace the supply of residential properties. Home prices in Hong Kong will keep for a sustainable growth in the foreseeable future,” said Fullsun in the statement to the exchange. “The management considers that tapping into the property market in Hong Kong diversifies the investment portfolio and broadens the revenue base of the Group.”
The 17-storey residential project is situated at the junction of Prince Edward Road West and La Salle Road, in Ho Man Tin, Kowloon. With construction work substantially finished, the residential block will have 32,817 square feet (3,049 square metres) of floor space. Fullsun’s parent company Fusheng Group is ranked as the 48th largest developer in China by contracted sales last year.
By disposing of the project at a price of HK$920 million, or HK$28,034 ($3,574) per square foot, mid-sized Hong Kong developer Easyknit Group will gain approximately HK$331 million ($42 million), exclusive of any expenditures since buying the land four years ago. Established in 1981 as a clothing company initially, Easyknit now engages in property development and investment, securities investment and loan financing, its corporate website shows.
MTR Line Boosts Value of Central Kowloon Neighborhood
Located east of Mong Kok, Ho Man Tin’s housing market has been rising in value since a new metro stop opened in late 2016, connecting the residential area to the Kwun Tong Line. Ho Man Tin is now predicted to see rental prices jump by 18 percent this year — the biggest increase in Kowloon.
Kerry Properties’ residential project Mantin Heights, which was ready for move-in earlier this year, attracted potential buyers in 2016 during its launch for its close proximity to schools, according to a South China Morning Post account.
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