Receivers Marketing Seized Kowloon Buildings at 59% Off as Banks Lose Patience

A pair of ageing buildings in Hong Kong’s Tsim Sha Tsui area have been seized from the family of the city’s late “Shop King” Tang Shing-bor and are being offered for sale at less than half of what the clan paid to acquire them in 2016, as Hong Kong lenders lose patience with overstretched property owners.

Receivers and managers of the adjacent buildings at 37 and 39 Carnarvon Road have appointed brokerage firm Colliers as sole agent to manage a public tender for the properties, with the assets estimated to be worth HK$370 million, according to local media accounts, with that valuation representing a 59 percent discount from what the Tang family spent on them eight years ago.

“Given its potential for consolidation and development, the property may be transformed into a brand new grade-A Ginza-style commercial building, drawing attention from various types of high-end consumer goods or specialty brands, thereby enhancing the value of the property,” Andrew Ng, director of capital markets and investment services at Colliers Hong Kong said in a release. “I believe that the property will garner significant interest from investors, family offices, international funds and developers for competitive bidding.”

The tender, which concludes at noon on 8 July, follows unsuccessful attempts by the Tang family to sell the properties from as early as April 2023, with the property having fallen into receivership after an October marketing exercise managed by Cushman & Wakefield failed to find a buyer.

Significant Markdown

The Tang family was reportedly asking for HK$680 million for the properties in April 2023, with that price being reduced to HK$500 million for the October marketing effort. That compares to the HK$900 million the family paid to acquire the assets in 2016, including HK$320 million for 37 Carnarvon Road, according local media reports.

Located where Carnarvon Road meets Cameron Road in Kowloon’s Tsim Sha Tsui retail hub, the five-storey buildings have a combined gross floor area of 10,460 square feet (972 square metres), with retail space on the ground, first and second floors, with residential accommodation on the third and fourth levels.

According to market sources, the commercial element of the properties is fully occupied, with pharmacies, beauty shops, beverage shops and mobile phone accessory vendors among the tenants. The properties generate a total monthly rent of HK$783,000, according to local media reports.

The tender comes amid plummeting commercial property valuations and sliding rents in the Asian financial centre, which has seen capital values of high street shops citywide fall 35 percent from 31 December 2019 to year-end 2023, according to JLL, while retail rents in the Tsim Sha Tsui area declined 23.4 percent over the same period.

Hong Kong’s retail market is expected to remain under pressure amid sluggish consumption, muted tourist levels, and increasing outbound travel by local residents. The number of departures by local residents in the first two months of the year returned to 2019 levels, while tourist arrivals were only 63 percent of 2019 levels over the same period, according to a report by Colliers, with retail sales in February having increased by just 1.9 percent year-on-year.

Fire Sales

Tang, who died in May 2021, earned his fortune and “Shop King” moniker from a 200-strong portfolio of retail shops he accumulated in Hong Kong’s Causeway Bay and other top shopping districts before the 1997-98 Asian financial crisis torpedoed a planned IPO for the firm. The patriarch’s properties were estimated to be worth HK$75 billion in 2020, according to Bloomberg.

In later life, Tang began grooming his youngest son Stan to take over the family business. Under the junior Tang, the family expanded into the hospitality sector, acquiring both a 14-storey hotel at 80 Kimberly Road in Tsim Sha Tsui for HK$330 million and the 30-storey Inn Hotel Hong Kong in Yau Ma Tei for HK$1.1 billion in 2018, among other assets.

That bet went sour starting in 2019 as its hospitality business ground to a halt following a collapse in mainland Chinese visitors to Hong Kong following the city’s 2019 protests, with that challenge compounded by the COVID-19 pandemic.

By 2020, Tang was looking to back out of the hospitality business, having scrapped a planned HK$328 million acquisition of the H1 Hotel in Mong Kok and initiating a clearance sale of the family’s property portfolio.

Last month, the Tang family sold two retail units in the Camel Paint Building located in the Kwun Tong area at a reported price of HK$150 million, representing a 59 percent discount to acquisition cost. Those units were marketed together with the adjacent Camel Paint Centre office building, which remains on the block at a reported asking price of HK$1.1 billion.

In December, the family appointed JLL to market the 598-key Hotel Cozi Harbour View in the Kwun Tong area for an asking price of HK$2.22 billion as well as a 56.7 percent stake in an adjoining industrial building for HK$180 million.