Henderson Land Development is paying a total of HK$1.05 billion ($134.5 million) to buy out a seven-storey apartment building in the Hong Kong’s upscale Mid-Levels neighbourhood, which the property giant plans to redevelop into a 30-storey tower.
The developer controlled by Lee Shau-kee, which had already bought up over 90 percent of the Feng Fong Building, bought the remaining units it did not own at a public tender that closed on Tuesday, marketing agent Savills confirmed to Mingtiandi. The HK$1.05 billion price tag refers to the value of the entire redevelopment site, located at Caine Road 73-73E.
Henderson executive director Wong Ho Ming told the Hong Kong Economic Times that the firm would invest between HK$1.5 billion ($192.3 million) and HK$1.6 billion ($205.1 million) to redevelop the 7,557 square foot (702 square metre) site into a residential and commercial property spanning approximately 61,000 square feet (5,667 square metres). Upon completion in about four years, the pencil tower is expected to yield around 160 units of more than 300 square feet (28 square metres) each.
Mid-Levels May Get Another Prime Condo Property
Completed in 1956, the existing building near the famed Central-Mid-Levels escalators has 38 residential units along with basement retail shops. Henderson purchased the remaining space in the building under the city’s Land (Compulsory Sale for Redevelopment) Ordinance, which allows developers to force an auction to buy an entire site for redevelopment if they already own at least 80 percent.
Henderson is believed to be aiming to recoup its investment by selling condominiums in the prime residential area halfway up Victoria Peak. The listed commercial and residential builder is said to have sold the 5,000 square foot penthouse unit in its nearby 39 Conduit Road complex for HK$522 million ($66.9 million) last month, making it the most expensive apartment in Asia.
“I think the outlook is still good, because in that particular neighbourhood, there are virtually no vacant sites available for redevelopment,” said Charles Chan, Managing Director of Savills Valuation and Professional Services, commenting on the local market. “So developers have to acquire flat by flat in order to get 100 percent ownership of a particular building, to achieve redevelopment of the building, which is time-consuming.”
Henderson Grabs Another Ageing Apartment Block
Henderson’s latest move in Central echoes a transaction this past June, in which the developer bought a decaying, 53-year-old apartment block in Kowloon for the reserve price of HK$1.698 billion ($216.6 million). The builder invoked the same compulsory sale ordinance to pick up the remainder of the building, of which it already owned 80 percent.
Henderson said it would demolish the existing nine-storey, 238-unit Kowloon structure, called the Hoi Hing Building, and build a new 460-unit residential project, investing a total of HK$2.6 billion ($333.3 million) including land costs.
The property firm has made a habit of scooping up old urban buildings for redevelopment. According to DBS Group, Henderson has a development land bank of about 7.8 million square feet (724,644 square metres) in Hong Kong and 91 million square feet (8,454,177 square metres) in mainland China as of year-end 2016.