HNA Said Buying Kwun Tong View From Phoenix for HK$2 Bil

Maybe it’s the memories of jetliners buzzing the Kowloon shoreline, but China’s HNA seems to have a particular fondness for Hong Kong’s Kai Tak area. The mainland conglomerate is said to be finalising a deal to spend HK$2 billion ($257 million) on an office property near the former airport site, according to local media reports.

HNA is currently engaged in due diligence on the proposed purchase of Kwun Tong View, a 144,780 square foot (13,500 square metre) office building at 410 Kwun Tong Road in Kowloon East from Hong Kong-based private equity real estate firm Phoenix Property Investors, according to an account today in the Hong Kong Economic Times.

For HNA, the acquisition of the 24-storey commercial complex would add to HK$27.2 billion that the parent company of China’s Hainan Airlines has spent buying land in the rapidly redeveloping industrial area over the last six months.

Phoenix Waits Seven Months, Gets Five Percent Price Boost

Should HNA purchase Kwun Tong View at the reported price it would value the property at approximately HK$13,600 per square foot – nearly five percent more than the rate that Phoenix agreed to sell the building for in September last year when Li Ka-shing-linked Prosperity REIT was the buyer.

Prosperity REIT’s unit-holders rejected that HK$1.9 billion deal in October, after Li’s Cheung Kong Property Holdings, which owns nearly 19 percent of the REIT’s units reportedly withdrew support for the transaction.

Hainan Airlines is said to be acquiring Kwun Tong View for investment purposes, although the mainland firm would also reserve some floors for its own use, according to the local press account, citing sources familiar with the pending transaction. Spokepersons for Phoenix Property Investors and HNA failed to respond to inquiries from Mingtiandi before this story was published.

HNA Builds a Hong Kong Home in Kai Tak

The proposed en bloc acquisition comes less than two months after the latest in a string of HNA land purchases in the Kai Tak area. In mid-March the conglomerate helmed by “Buddhist billionaire” Chen Feng beat out bids by Hong Kong heavyweight Sun Hung Kai and 14 other developers to purchase its most recent Kai Tak site for HK$7.44 billion ($958 million).

Since November last year, Chen’s company has now agreed to pay more than HK$27 billion to purchase 36,865 square metres of Kai Tak land, at a rate per square foot nearly double the amount paid in earlier land sales in the area. Hong Kong relocated its international airport to a new site in Chek Lap Kok in 1998, and the city’s government has since been promoting the redevelopment of Kai Tak as an alternative commercial location for companies repelled by Central’s world-leading office rental rates.

While HNA stands out for its aggressive bidding practices, the company’s interest in Hong Kong fits into a broader trend. Mainland investors spent a record $5.32 billion on Hong Kong real estate last year, according to a report released last week by property consultancy Colliers International – up from just $3.31 billion in 2015.