Two years after launching a residential joint venture in Kowloon East, Hong Kong’s Wang On Properties and Shanghai-based developer CIFI Holdings are teaming up again with a plan to build homes on Hong Kong Island.
The pair of Hong Kong-listed developers announced on 28 October that they have acquired a pair of adjacent properties in the city’s Fortress Hill area with plans to develop a HK$2.6 billion ($335 million) combined commercial and residential project on the site.
“Hong Kong is an international financial centre with well-developed commercial and economic activities which has a huge demand for housing,” CIFI head of capital markets and investor relations Lawrence Leung Yuk Ming said in a statement. He added that, “The project is located in the core area of Hong Kong island, where the scarcity of land provides greater flexibility in property development.
The partners’ plan came together after they agreed to acquire 101 King’s Road, a 26-storey commercial building, with CIFI on 23 October having acquired an adjacent parking lot at 111 King’s Road in the neighbourhood five stops east of Central on Hong Kong’s Island MTR Line.
Merging Fortress Hill Sites
CIFI and Wang On are acquiring 101 King’s Road from Sing Pao Investment, a company controlled by the children of Sing Pao Daily News founder Ho Man-fat, for an undisclosed sum.
Local media reports indicate that the price for the 1982-vintage building, which occupies an 11,461 square foot (1,065 square metre) site, was around HK$1.7 billion. At that rate the CIFI-Wang On joint venture would be paying the equivalent of HK$9,891 per square foot for the 171,867 square foot property.
The partners plan to merge that site with a parking lot at 111 King’s Road which CIFI had agreed to acquire from Southeast Asia Properties in late October. The developer purchased that 9,336 square foot plot for HK$180 million, with the two properties together providing a 20,797 square foot site for their new building.
“The project is close to the North Point business district and to Victoria Park in Causeway Bay,” noted Wang On executive director Teresa Ching. She added that the project, which is expected to be launched onto the market in 2022, is within a few minutes walk of the Fortress Hill MTR station.
Braving a Housing Downturn
CIFI and Wang On are paying an estimated HK$1.88 billion for the two sites, despite a downturn in Hong Kong’s housing market since they launched their Kowloon East joint venture in 2018.
The Maya project in Kowloon’s Yau Tong area had brought the partners HK$2.9 billion in contracted sales from deals for 253 units, as of 31 March of this year. The two companies developed that 326-unit project as a 50-50 joint venture after Wang On had purchased the site independently.
Now, CIFI is taking a 60 percent stake in the Fortress Hill venture, with Wang On holding the remaining 40 percent, as Hong Kong’s housing market faces near-term challenges.
In a recent report, property consultancy Savills called sentiment in Hong Kong’s luxury residential market “mixed at best” during the third quarter, with prices for homes in the high-end segment during the period sliding by 0.1 percent on Hong Kong Island and 0.5 percent in Kowloon, compared to the previous three months.
The agency said that luxury home prices on Hong Kong island have now fallen by 8.6 percent from their peak during the second quarter of 2019, and predicted a further 3 to 5 percent slide this year. Savills predicted a potential further decline of 5 to 10 percent in 2021.