Henderson Land Development has moved a step closer to consolidating a site for a 1 million square foot mixed-use project in Kowloon’s Hung Hom area, thanks to a judicial ruling last week.
Hong Kong’s Lands Tribunal last week approved an application from Henderson for the compulsory sale of a set of five buildings on Whampoa and Baker Streets in the neighbourhood at the western edge of Kowloon Bay that is set to add a 19,700 square foot (1,830 square metre) site to the developer’s pipeline.
The property court’s approval will trigger a public tender for the remaining space in the set of 60-year-old buildings after Henderson spent the last decade buying up units in the seven and eight storey addresses before finally surpassing the 80 percent ownership threshold necessary to qualify for a compulsory sale under local law.
Henderson Try, Tries Again in Kowloon City
Henderson was able to successfully force the transaction, which values the group of 60-year-old buildings at 1-21C Whampoa Street and 80-86 Baker Street at a total of approximately HK$2.14 billion ($273 million), after boosting its ownership of the floor space in the five buildings to between 90 and 97 percent over the past three years.
The developer was forced to buy up more of the 144 homes and 20 shops in the aging properties after an earlier application for a compulsory sale in 2016 was rejected after minority owners in the buildings successfully argued that the the HK$914 million valuation low-balled the property.
By moving to the final acquisition stage, Henderson is poised to add the rights to develop an estimated additional 177,000 square feet of commercial and residential space to its plans for Hung Hom through a process which values the remaining space at HK$12,000 per square foot.
Pushing Forward with Hung Hom Square Mile
This latest compulsory sale is Henderson’s fifth such acquisition in Hung Hom over the past two years as it consolidates a mega-project in the area.
About 100 metres away from the site of its latest victory, the developer in May purchased the remaining units in another set of buildings also on Whampoa Street and Baker Street through a public tender which valued the addresses at a combined sum of over HK$1.1 billion.
City law in Hong Kong allows developers to apply for a forced sale of the remaining space in buildings of 50 or more years old, and with the financial hub’s ever-climbing land prices, compulsory sales have become a potentially cost effective approach for developers patient enough to wait for opportunities, with Henderson among the strategy’s leading practitioners.
The blue-chip home builder has the ambition to redevelop the entire neighborhood on Gillies Avenue South, Bulkeley Street, Baker Street, Whampoa Street and Fuk Chi Street in the eastern part of Kowloon city. The strategy covers an area of 112,000 square feet, with the potential built area of the finished project adding up to more than one million square feet.
More Sites on the Way
Henderson has also obtained over 80 percent of the space at 23-29, 35-37 Whampoa Street and 79-81 Baker Street, which are adjacent to the target of its latest compulsory sale. The two combined sites could potentially yield up to 255,000 square feet once fully consolidated.
In May, city authorities approved Henderson’s plan for the four Hung Hom sites it obtained through compulsory sales, giving the developer the opportunity to build 282,000 square feet of homes and another 55,000 square feet of commercial space in the district.
The scheme for the combined parcels at 30-50A Gillies Avenue South, 75-81 Baker Street, 23-41 Whampoa Street, 12-22A Bulkeley Street includes construction of a 27-storey mixed-use tower and two 25-storey residential blocks.
In the rapidly gentrifying area at the western shore of Kowloon Bay, the company founded by billionaire Lee Shau-kee is following a redevelopment strategy similar to the approach it is using to develop a set of sites it acquired in West Kowloon last year.
In that project less than four kilometres west of its most recent acquisition, Henderson is now transforming a set of properties acquired at least in part through compulsory sales into a multi-building, mixed-use project dubbed Square Mile, according to the company’s 2018 final results announcement, as released on 20 March.
The West Kowloon Square Mile combines projects on Ka Shin Street, Li Tak Street, Kok Cheung Street, Fuk Chak Street, Pok Man Street, Man On Street and Tai Kok Tsui Road into a residential and commercial development built around an open air plaza for cultural and leisure activities.