Henderson Land Development has applied for a compulsory sale of four aging buildings in Hong Kong’s Mid-levels, according to a filing at the city’s Lands Tribunal as the blue-chip developer continues to play its preference for redevelopment projects.
Should the application for the forced sale be successful, the Hong Kong-listed developer will be able to buy up the remaining bits of the aging properties in the popular Soho entertainment area through a public tender which could give the company full rights to redevelop the site into a new project with a gross floor area of up to 110,000 square feet (10,219 square metres).
Henderson’s application for the compulsory sale of the mixed-use project comes as rising land prices and increased competition among developers for scarce plots make the painstaking process of buying out older buildings piece by piece an increasingly attractive avenue for securing new sites.
Henderson Moves into Elgin Street
Before applying for the sale, Henderson had already bought up from 91.67 percent to 96.55 percent of the space in the set of vintage buildings located at 33-47 Elgin Street since starting the acquisition process in 2014. Hong Kong law allows an owner which controls 80 percent or more of the space in a building aged 50 years or more to petition the government for a compulsory public tender of the remaining space.
The four properties, which vary in height from six to nine storeys, are valued at HK$963 million ($122 million) and occupy an 11,777 square foot site. The area is approved for high density residential development, with the first three floors allowed to be used for commercial purposes and a new building potentially reaching over 30 storeys high.
Aggregating a controlling share of an aging building and forcing a compulsory sale has become one of Henderson’s preferred approaches for acquiring new sites.
Last month, the company consolidated the last pieces of a set of buildings on Whampoa Street and Baker Street in Kowloon’s Hung Hom area, through a compulsory sale which valued the addresses at a combined sum of over HK$1.1 billion.
In that Kowloon City project the developer has already acquired at least 80 percent ownership of properties which cover a combined site area of more than 112,000 square feet which Henderson could potentially build into a project covering more than one million square feet.
Compulsory Sales on the Rise
A total of 39 compulsory sale applications were received in 2018, a six year high and an increase of 160 percent from the previous year, according to figures reported by the Lands Tribunal.
In October 2017, Henderson had bought out the remaining space of the 61-year-old Feng Fong Building at 73 Caine Road, which is about 200 metres up the hill from the properties on the Elgin Street, for HK$1.05 billion.
Augustine Wong Ho Ming, executive director of Henderson Land said at the time that the group plans to turn the seven-storey building into a 160-unit residential development combined with retail elements, with a total gross floor area of 61,000 square feet and an investment of HK$1.5 billion to HK$1.6 billion.