A branch of one of China’s largest state-owned conglomerates is growing its footprint in Hong Kong with the HK$820 million ($106 million) purchase of an industrial asset in the eastern New Territories, as mainland players return to the Hong Kong market.
China Resources Beer (Holdings) Company Limited, a Hong Kong-listed firm that sells China’s Snow Beer, the mainland’s most popular brew, is now in the final stages of an agreement to purchase the Kader Industrial Centre in the Fanling area from entities controlled by Hong Kong retail magnate Tang Shing-bor, according to multiple sources who spoke with Mingtiandi.
The industrial deal is being concluded just days after mainland telecom giant China Mobile paid a record price to win a tender for a government industrial site in the Sha Tin area of the New Territories, and follows a number of commercial and residential real estate purchases by mainland companies in 2020.
Taking Up Space in Fanling
In Fanling, the company once known as China Resources enterprise is purchasing the 202,361 square foot (18,800 square metre) property at 17-19 Lok Yip Road for the equivalent of HK$4,052 ($522) per square foot of built area, according to Mingtiandi calculations.
Should the sale be successfully completed at the negotiated purchase price, Tang, who is known as Hong Kong’s “Shop King” for his vast portfolio of high street retail, would achieve a capital gain of HK$105 million on the asset, after having purchased the industrial asset from Goodman Group for HK$715 million in 2015.
The six-storey building is currently leased to Shenzhen-based SF Express Co., Ltd., a mainland China delivery services company for HK$10.7 per square foot per month, which generates rental income of HK$2.226 million per month for the new owner.
At the reported sale price the 1989-vintage warehouse would have appreciated at an average rate of 14.7 percent in the five years since Tang purchased the asset, which occupies a 40,473 square foot site in the industrial area east of the Hong Kong Golf Club.
Centaline property agency is said to have represented Tang in the sale of the property. Neither China Resources Beer nor Tang had responded to inquiries from Mingtiandi regarding the reported transaction.
Shop King Keeps Busy
Known in the Hong Kong real estate industry as Uncle Bor, Tang’s Fanling sale is the latest in a flurry of 2020 transactions for Hong Kong’s 14th richest man.
In early May, Tang braved the property market downturn to buy a trio of retail properties for HK$1 billion ($130 million). Then later that same month, the veteran investor put a portfolio of commercial and residential properties on the market for a combined HK$1.5 billion ($190 million) as part of a plan to free up capital for the development of a large-scale senior-living facility in Sai Kung.
In comments to the local media in June, Tang Shing-bor’s son, Stan Tang, who heads the family’s Stan Group, said that given current downward pressure on the market, readjusting their business strategy by selling some assets to raise money for new acquisitions represented an opportunity to optimise their portfolio.
Mainland Capital Influx
The purchase by China Resources Beer Ltd (HKEX 00291) is likely to represent an effort by the HK$149.71 billion mainland giant to secure premises for its own expansion in Hong Kong, according to market analysts who spoke with Mingtiandi.
The purchase comes after China Mobile agreed to pay HK$5.6 billion for the purchase of its 98,792-square foot site in Sha Tin at a Lands Department auction on 8 July.
That industrial deal came after Shenzhen-based Kaisa Group Holdings in January this year expanded its foothold in Hong Kong by purchasing a site near the east coast of Castle Peak Bay for HK$3.5 billion. The developer followed up in April by purchasing a 2,718 square foot mixed-use site in Mong Kok for HK$85.9 million.
Also in April, the financial muscle of one of China’s largest financial institutions was on display as Ping An Insurance invested HK$11.27 billion to purchase a 30 percent stake in a Sun Hung Kai commercial project in West Kowloon.