‘Bargain Hunter’ to Swallow Loss on Renovated Wan Chai Tower

Another Hong Kong property developer is ready to swallow a loss amid the ongoing slump in asset prices in the city, seeking to sell his 19-floor holding in a Wan Chai office building for around 10 percent less than he paid to acquire the property a few years ago.

Woodson Group founder Sammy Lee is seeking HK$398 million for the 382 Lockhart Road property, just a short distance from the Causeway Bay and Wan Chai metro stations in a bustling commercial hub east of Hong Kong’s high-end core. 

While the group’s website states its strategy is “to pursue and identify undervalued real estate opportunities in prime locations and actively invest, refurbish or redevelop these projects,” the approach appears to have backfired this time with Lee’s investment in upgrades of the property failing to boost its value.

Local media reports indicate that the private investment firm paid an average of HK$9,250 per square foot to purchase the floors from 2021 through 2023, but is now asking about HK$8,405 per square foot for the 47,349 square feet (4,399 square metres) of space, representing a loss of around HK$40 million ($5.2 million) on the original purchase price alone.

Bargain Hunter

The media reports show that Lee and related parties paid a total of HK$438 million buying up office floors in the 23-storey building from the family of Hong Kong’s late “Shop King” Tang Shing-bor as the city’s declining commercial property market put the investment clan under pressure.

But Hong Kong commercial rents have continued to slide, and in the first quarter of 2025 were 42.2 percent off their 2019 peak, according to Cushman & Wakefield data. With more supply coming online and continued economic uncertainty, Cushman expects rates to fall as much as 9 percent for the year.

Having taken possession of the entire office portion of the tower, which rests above a retail podium, Lee subdivided the 16th to the top floors of the building into 52 furnished office suites and leased them out individually while keeping the 5th to the 15th floor as regular commercial floors. 

In 2023 the developer also invested a renovation which included upgradingthe lifts, lift lobbies, common areas and building systems.

“The rent of the subdivided office units are at the range of HK$50-60 per square foot gross area, which is slightly higher than market level, given the average unit rent of grade A offices in the same district has dropped below $50 recently,” said Bobby Mak, real estate valuer at Hong Kong-based CHFT Advisory and Appraisal.

The property, now 90 percent leased, will be sold with existing tenancies, naming rights and signage, according to CBRE, which is marketing the property. Lee’s portion of the building currently generates a monthly net rental income of around HK$1.1 million, amounting to a yield of approximately 3.3 percent if sold at the asking price. 

A lower level unit of 1,330 square feet in Lee’s portion of the tower was recently leased for HK$21 per square foot per month, which was 25 percent cheaper than a comparable transaction in May 2023, according to Centaline data.

Devaluation Bites

Lee’s marketing effort for the Wanchai tower comes after the investor last August sold a 6,632 square foot office in the Bank of America Tower in Admiralty for HK$121 million, or HK$18,245 per square foot. The price was 17 percent lower than he paid to acquire the space from the American Chamber of Commerce in Hong Kong in 2020, although he was said at the time to have bought the property at a 20 percent discount from the market value.

In the properties that he continues to hold Lee has faced falling rents, including leasing out a mid-floor office unit in tower two of Admiralty Centre in 2022 at a rate said to be the lowest in 12 years. Having acquired the Admiralty space for HK$86.16 million in 2020, Lee’s HK$34 per square foot lease two years later translated to an annual yield of 1.56 percent.