
Kwun Tong View (right) lines up with One Pacific Centre and SHK’s Millennium 5 (left)
Prosperity REIT has agreed to acquire a 24-storey commercial building in Kowloon’s Kwun Tong area from Phoenix Property Investors, as the two property investment specialists continue to cash in on demand for office space in developing districts of Hong Kong.
Prosperity REIT, which is managed by investor John Lim’s ARA Asset Management, announced the HK$1.875 billion ($242 million) acquisition of the 144,780 square foot (13,500 square metre) Kwun Tong View building at 410 Kwun Tong Road in a statement to the Hong Kong stock exchange dated September 12th.
The transaction price works out to HK$12,951 per square foot of gross leasable area.
Phoenix Profits From Value-Add Project
In 2014 Phoenix acquired Kwun Tong View a one-time industrial building along Kwun Tong Road, which now forms part of a row of A grade commercial buildings along with Sun Hung Kai’s Millennium City and Hong Kong Pacific Investment’s One Pacific Centre.
“Kwun Tong View has benefited from its location along Kwun Tong Road and close to the APM project,” noted Reeves Yan of Colliers International, which represented both the buyer and the seller in the transaction. The project is also said to have been the only property on Kwun Tong Road to go on the market this year, with SHK holding many of the major sites along the commercial strip.
Phoenix, which specialises in value-added projects had renovated the building’s lobby and internal system, along with making other improvements after acquiring the asset. Kwun Tong View also benefits from its proximity to the Kwun Tong MTR station and the popular APM mall in SHK’s Millennium City.
Prosperity REIT will add Kwun Tong View, which has 117,159 square feet of office space across 18 floors, and 27,600 square feet of retail space in its lower levels, to its existing portfolio of properties in Kowloon East, which already includes the commercial properties Prosperity Place on Shing Yip Street and 9 Chong Yip Street along with the combination industrial and office project Prosperity Center at 25 Chong Yip Street.
Redevelopment of Kowloon East Providing Investment Opportunities
With top office rents in Hong Kong’s Central district among the highest in the world at around HK$165 per square foot per month, more companies are looking for more affordable locations in the Asian financial centre, and Kowloon East has become a popular alternative business address, with asking rents in the area ranging from HK$25-35 per square foot per month according to brokers familiar with the neighborhood.
Overall, Kwun Tong View was over 88 percent leased in July, according to a statement from Prosperity REIT, with the retail space completely let out and the office area at 85.9 percent occupancy. Monthly rental per square foot averaged HK$37.44 per month, with net property income for the six months ending June 30th coming to HK$25,630,000.

Reeves Yan of Colliers Hong Kong
In addition to the high level of occupancy at Kwun Tong View, the property also features a stable tenant mix. “The Hong Kong government, including the Buildings Department and the Architectural Services Department, is the major tenant of the building,” noted Colliers’ Yan. He added that, “Kwun Tong View is also popular with private occupiers, with Nanyang Commercial Bank, OCBC Wing Hang Finance and other financial services firms taking space in the building.”
In a statement, Prosperity REIT seemed to point to the growing liquidity of office assets in the district, noting that, “An increasing number of multinational firms have chosen to acquire office spaces in Kwun Tong for their own-use or investment purposes.” The trust also zeroed in on the Hong Kong government’s ongoing project to redevelop the Yue Man Square at the centre of the Kwun Tong area as adding to the project’s future value. Kwung Tong View connects via a footbridge to the 4 million square feet urban renewal project.
Formerly an industrial hub, the Kwun Tong area has become a centre for redevelopment in recent years. In May this year Hong Kong-based property investment house Pamfleet sold The Mark, a commercial building on Wai Yip Street in Kwun Tong to Sitoy Group Holdings for HK$560 million ($72 million) just over two years after acquiring the former industrial building.
Gaw Capital has also been active in the area, transforming a former warehouse in Kwun Tong into loft-style offices.
To finance the acquisition, Prosperity REIT has entered into an agreement with Singapore’s DBS Bank for an unsecured term loan of up to HK$1.95 billion, according to a statement by the trust.
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