Mainland Developer Said to Back HK$1.86B Purchase of Hong Kong Luxury Site

Carnival Group International Holdings has agreed to sell a low-density residential project on the south side of Hong Kong Island for HK$1.86 billion ($237 million), according to a Hong Kong Stock Exchange filing, bringing the tourism-focused developer a 43 percent capital gain in less than two and half years.

The buyers of the luxury project at 16A-16D Shouson Hill Road are reported to be individuals associated with Shenzhen-based develop Zhongzhou Real Estate, a source familiar with the transaction told Mingtiandi.

The price for the project, which occupies a 49,773 square foot (4,624 square metre) site on the same street that is also home to Hong Kong billionaire Li Ka-shing, is within 1.5 percent of the price per square foot of built area that another project on Shouson Hill Road sold for in July, indicating some resistance to the current market downturn for luxury residential projects.

South Side Site Holds Value

With the site eligible for redevelopment into 22,398 square feet of housing, the new owners paid the equivalent of HK$83,043 per square foot of housing for the luxury site. That price remains largely steady with the HK$84,286 per square foot that a set of directors of China Resources Land paid for a similar site at 39 Shouson Hill Road in July of this year.

The new owners are expected to redevelop the project, which is currently home to a set of four three-storey townhouses, to take advantage of its prime location overlooking Deep Water Bay. Shouson Hill Road, which was named after the first Chinese member of Hong Kong’s Executive Council, is home to the official residence of Hong Kong’s Financial Secretary in addition to being close to the Hong Kong Country Club, Hong Kong Golf Club and Ocean Park nearby.

The sale of the Shouson Hill Road site comes within days of a luxury home at Victoria Peak, just up the slope from Shouson Hill Road selling at a more than seven percent discount off of the price of a similar home sold in April. House No. 16 at Mount Nicholson, a luxury residential project jointly developed by Wheelock & Co together with Nanfung Development, sold for HK$90,484 per square foot on December 31st, down from the HK$97,695 per square foot paid for “House No. 17” in the development less than nine months earlier.

Mainland Developers Grab Another Luxury Site

Like 39 Shouson Hill Road, this latest site is said to have been acquired by individuals with links to a mainland developer.

Controlled by the Centralcon Group, Zhongzhou has been engaging in real estate development and operations in Shenzhen, Shanghai, Chengdu, Dalian, Qingdao and Hong Kong having completed such projects as the grade A Shenzhen Zhongzhou Building in Shenzhen’s Futian district, the Shenzhen Zhongzhou Marriott Hotel and the Shenzhen Sungang Logistics Center, according to its website.

Hong Kong-listed Carnival Group had purchased the residential property in September 2016 for HK$1.3 billion ($165 million) at HK$58,000 per square foot. At the time of its acquisition of the 18-unit property, the developer had said that in view of the demand for luxury residential property in Hong Kong, together with the company’s experience in real estate projects in China, the purchase of the asset would allow it to capture future capital appreciation.