A residential project in a toney section of Hong Kong island’s Happy Valley has sold for HK$1.24 billion ($159.4 million) following a rise in residential rents in the area, fueled by a healthy IPO pipeline and hopes for economic recovery in the city.
Valley Villa, at 341-343 Tai Hang Road in the upscale section of Wanchai district, was sold through tender by local developer Sunny Enterprises to Peterson Group, owned by one of Hong Kong’s wealthiest families. Currently led by third generation tycoon Tony Yeung, the developer paid above market expectations of HK$1 billion for the 11,000 square foot (1,022 square metre), according to Peter Yuen, Savills’ managing director and head of investment and sales.
Peterson Group plans to redevelop the 75-year leasehold site into low-density luxury flats for long-term investment, according to a press release from Savills, and will be adding to the limited supply in Hong Kong Island’s luxury apartment market.
Should Peterson Group be able to secure permission to boost the plot ratio to 2.1 from the current 1.6, some 23,845 square feet of new space could be built on the site, boosting the estimated value of the project to as much as HK$1.9 billion, or nearly HK$80,000 per square foot, said Yuen.
New Home in Happy Valley
Peterson Group’s newly-acquired property, just 3 kilometres (1.8 miles) away from the Hong Kong Jockey Club in Happy Valley, can yield up to 18,168 square feet of gross floor area under the current plot ratio, with the new owner required to pay a land premium to the government to boost the amount of development permitted.
The four-storey block that currently occupies the property is divided into eight units of between 2,024 square feet and 2,077 square feet each with two units per floor, according to local news site HK01.
Sunny Enterprises, the holding company of the late Pun Sun-on (潘新安), had acquired the site in 1955 at a price of HK$220,000, and developed Valley Villa as one of a number of projects the company took on nearby. In 1958, Sunny developed Starlight House at 32-34A Leighton Road in Causeway Bay and in 1959 built Race Course Mansion at 93-95 Wong Nai Chung Road in Happy Valley.
With Pun having passed away in 2015, Sunny Enterprises sold Valley Villa in a tender that closed on 8 September as home sales jumped 15 percent year-on-year in the third quarter.
Peterson Group’s acquisition of the residential property followed a 1 percent rise in Hong Kong Island’s luxury apartment rents in the third quarter, compared to the preceding three months, while rents in Happy Valley and Jardine’s Lookout were up by 1.2 percent.
In Kowloon and the New Territories, luxury leasing markets remained weak in the period and saw slight rental declines of 0.1 percent and 0.8 percent, respectively.
Adding Luxury Supply
Home prices in Tai Hang Road are “second to the Peak district,” due in part to the lack of residential supply in recent years, said Savills’ Yuen. Hong Kong Island also recorded limited availability of luxury apartments in the third quarter, according to a report from Savills.
With demand on the rise, developers are scrambling to secure sites for new projects, and just in December last year, Hong Kong developer Wharf Holdings Ltd agreed purchase a residential site on Mansfield Road on the Peak for a record-breaking HK$12 billion.
Amid the intense competition for government land in Hong Kong, developers are expected to shift to private markets for potential land, Yuen noted in a press release. He added that sites on Hong Kong Island for luxury residential projects, such as Valley Villa, are especially attractive.
Family Owned Asset
The property on Tai Hang Road was sold to the developer as luxury property prices were predicted to grow by 3 percent in the second half of 2021.
Together with Henderson Land Development, Peterson Group jointly developed 39 Conduit Road, a luxury apartment in Hong Kong island’s Mid-Levels, which is home to some of the city’s most expensive penthouses.
A duplex unit in that upscale tower which had been owned by HNA Group before being seized by creditors, was reportedly sold within the past two months for HK$312.8 million, or 30 percent below what the mainland conglomerate had paid to acquire it, according to an account in the Hong Kong Economic Times.