Goodman Said Planning Buy of a Floor in Kowloon Industrial Building for $46M

Goodman Group is said to be conducting due diligence on a potential purchase of a floor of the Sunshine Kowloon Bay Cargo Centre in Hong Kong, in a deal, which would give the Australian developer ownership of more than a third of the industrial building following HK$1.06 billion ($135 million) in acquisitions since March of last year.

The Aussie industrial specialist is reportedly set to pay between HK$368 million ($46.8 million) and HK$388 million to acquire the 69,700 square foot (6,475 square metre) first floor in the Kowloon Bay industrial building from Tai Hung Fai Enterprises, an investment firm controlled by tycoon Edwin Leong. At the reported transaction price, the deal for the building’s first-floor space would change hands at between HK$5,279 and HK$5,567 per square foot.

The property currently leases for around HK$20 to HK$25 per square foot per month and generates a monthly income of over HK$1.56 million, which would provide an estimated yield of more than 4.8 percent if the property changes hands at HK$388 million, according to a Sing Tao  account.

Should Goodman follow through on the acquisition, the developer would be the owner of three floors and three units in the 10-storey building, covering 271,500 square feet or more than a third of the 40-year-old building’s 757,985 square feet of floor area following a series of acquisitions over the past 18 months.

Betting on the Bay

Located at 59 Tai Yip Street, the Sunshine Kowloon Bay Cargo Centre is less than a 10 minute drive from the Kwun Tong Road and Kai Fuk Road thoroughfares. Goodman representatives declined to comment on reports of this latest transaction when contacted by Mingtiandi.

In January, Goodman purchased the entire sixth floor of the building for a consideration of HK$368 million, according to Eric Chong, director of capital markets research at Savills. That buy followed the developer’s purchases of units B and D on the fourth floor in August 2021, at a consideration of HK$147.5 million.

In March and May 2021, Goodman purchased unit B on the second floor and the entire seventh floor for considerations of HK$182 million and HK$368 million, according to Chong.

The developer’s bid for the first floor at Sunshine Kowloon Bay Cargo Centre comes about eight years after Tai Hung Fai acquired the space for HK$223 million in 2014, according to local media accounts.

Hong Kong Holdings

As of 30 June, Goodman owned 15 stabilised properties in Hong Kong covering 16.1 million square feet.

News of this latest Kowloon Bay deal comes just three weeks after Goodman announced the opening of a data centre and technology hub in Hong Kong’s Tsuen Wan area, with two buildings in the four-structure campus already completed and fully leased to a pair of unnamed global customers, according to a press release.

In July, Goodman agreed to acquire nearly three-quarters of an industrial building in the New Territories from the family of Hong Kong’s late “Shop King” Tang Shing Bor, for around HK$380 million, according to Savills’ Chong.

That 15-storey building also sits about 550 metres (601 yards) from Goodman’s existing logistics centre on Castle Peak Road, and is less than 5 kilometres (3 miles) from the ATL Logistics Centre, where the group holds a 25 percent interest.

Goodman’s reported activity takes place after trades of industrial assets leapt 37 percent in the second quarter of 2022, compared to the same period a year earlier, to HK$9.2 billion according to a Colliers report published in July.