Henderson Land has received the green light from Hong Kong’s Buildings Department to build a 35-storey commercial tower on a car park site in Central that the developer pounced on for a record-smashing $3 billion one year ago.
The Murray Road car park site, which Henderson said it would redevelop into a “landmark building” in Hong Kong’s downtown business district, has now been approved for construction of a 465,000 square foot (43,200 square metre) property, according to an announcement by the government agency.
The approved design for the commercial plot includes a 35 storey with five basement levels. Henderson is said to be investing HK$26 billion to develop the 31,000 square foot site into an office building in Hong Kong’s traditional business district, along with an additional retail component, according to local news site HK01.
Henderson paid HK$23.3 billion ($3 billion) for the site at a government land auction in May of last year. The prime plot is located nearby a number of iconic office towers, including the 72-storey Bank of China building and the 63 storey Cheung Kong Center. The approved floor count for the Murray Road development is close to that of the nearby Bank of America Tower, which has 38 storeys.
Carpark Site Set Price Record in 2017
The Murray Road carpark brought record levels of interest as the first commercial site to go on sale in the city’s prime business district Central since 1996.
Henderson’s acquisition marked the biggest-ever property transaction in Hong Kong at the time. The developer paid the equivalent of HK$50,064 per square foot for the site with an approved floor area of 465,000 square feet.
Henderson outbid developers including Cheung Kong Property Holdings, Wharf Holdings, Hang Lung Properties, Nan Fung Development, Chinese Estates and Sun Hung Kai for the rare commercial plot.
Henderson Building Offices as Central Rents Rise
The outlook for Henderson Land’s upcoming commercial building in Central is promising as office rents in Hong Kong continues to rise. Last month, overall rents in the city climbed 1.1 percent month on month, the fastest growth rate in more than two years, according to JLL.
“The latest statistics announced by the government show Hong Kong’s unemployment rate at a 20-year record low. Coupled with the city’s buoyant economic climate, we expect leasing demand for office space and rentals to continue to grow in the months ahead,” Denis Ma, Head of Research at JLL said in a statement earlier this week. “As a result, we’ve revised our forecast upwards and now expect Grade A office rents to advance in the range of 5-10 percent in 2018.”
In Central, average rent for grade A office space grew 0.6 percent in April from the previous month to HK$158 per square foot, according to Knight Frank. Leasing demand in the district has been supported by expansion needs from the banking and professional services sectors, particularly companies from north of the border. Mainland corporates made up over half of new lettings in Central last month, JLL said.