Nan Fung Group is reportedly close to selling an office tower in Hong Kong’s Kowloon Bay area for HK$8 billion ($1 billion) to a mainland Chinese consortium. The deal, if closed, would be the second-largest real estate transaction in the city since the beginning of the year, after Henderson Land disposed of a North Point office building for HK$9.95 billion in January.
The top privately held developer is reported to have received bids from a number of mainland and foreign consortia for the 28-storey Octa Tower in the Kowloon East neighbourhood. An unidentified mainland group made an offer of HK$8 billion, which is close to Nan Fung’s asking price, according to a Hong Kong Economic Times account citing market sources.
Nan Fung and Savills, the sole sale agent for the property, did not respond to enquiries by Mingtiandi by the time of publication.
Ngau Tau Kok Office Tower Over 90% Occupancy
Located at 8 Lam Chak Street, Octa Tower is a 15-minute walk from the Ngau Tau Kok MTR station. The 794,332 square foot (73,796 square metre) building houses companies including Wing Lung Bank and mobile network operator CSL, with monthly rent averaging HK$25 per square foot.
Built by Nang Fung in 2010, the property currently has an occupancy rate of 97.5 percent and boasts a swimming pool, podium garden, and panoramic view of Victoria Harbour.
The sale, expected to close at the end of the month, would value the property at HK$10,738 per square foot given the reported price tag of HK$8 billion. In terms of total deal size, the transaction would be topped this year only by Henderson Land’s HK$9.95 billion January disposal of the 18 King Wah Road office building in North Point to a Chinese consortium backed by China Taiping Insurance Group.
That 329,800 square foot asset changed hands at HK$30,170 ($3,859) per square foot.
Nan Fung Stays Active in Kowloon East
Nan Fung is ramping up its portfolio elsewhere in Kowloon East. The developer has an upcoming office project in Kowloon Bay, The Quayside, which is just a five-minute walk from Octa Tower. The company has a 40 percent interest in the joint venture with Link REIT for the 883,897 square foot property, which is slated for completion next year at a cost of HK$9.9 billion.
Nan Fung also last year outbid 11 rivals to pay a record HK$24.6 billion ($3.16 billion) for a commercial site at the former Kai Tak Airport. That deal for the 204,988 square foot (19,044 square metre) in Kowloon East remains the city’s biggest-ever government land sale.
Donald Choi Wun-hing, managing director of Nan Fung, has expressed optimism on the development of the neighbourhood. The government’s drive to build infrastructure in Kowloon East will support satisfactory rental yields in the area, he told Radio Television Hong Kong last June.
Rising Kowloon East Welcomes MNCs
Nanfung’s series of Kowloon East projects come as the centre of gravity of Hong Kong’s office market is shifting across Victoria Harbour as planned infrastructure projects and intensive commercial development create a new hub for businesses seeking an alternative to Central’s stratospheric rents. According to a report last year by property consultancy CBRE, total grade A office stock in the area including Kowloon Bay, Kai Tak, Kwun Tong and Ngau Tau Kok will grow to 29 million square feet by in 2026, overtaking the current supply of 22 million square feet in Central, Admiralty and Sheung Wan.
Kowloon East has already lured a number of multinational tenants from the traditional downtown business district of Central, where grade A office rents are approximately four times as high. Late last month, DBS Bank took up the 5th to 10th floors in Two Harbour Square in Kwun Tong, marking the largest leasing deal of the year to date. The Singaporean bank is said to be consolidating its operations across the city into the new office.
Citibank also moved its Hong Kong headquarters to Citi Tower, One Bay East at 83 Hoi Bun Road in the area in 2016. The US bank will be joined by another bank next year as JP Morgan plans to relocate its Hong Kong team to Nan Fung’s The Quayside along the same road.
Leave a Reply