Tycoon Tang Shing-bor has sold a pair of buildings next to Hong Kong’s popular Times Square shopping mall for a total of HK$950 million ($122 million), paving the way for the rare parcel in Causeway Bay to be redeveloped into a 34,500 square foot (3,205 square metre) retail tower.
The buyer of the adjacent sites at 85 and 87 Percival Street is believed to be local builder Hysan Development Company, according to an account in the Hong Kong Economic Times.
Hysan, which operates the Hysan Place mall and the Lee Gardens office towers in Causeway Bay, is one of the largest commercial landlords in the prime shopping district. In response to an inquiry from Mingtiandi a spokesman for the developer said that the company cannot comment on market speculation.
The deal is another sign of Hong Kong’s robust commercial property market and the rising popularity of the “Ginza-style” vertical shopping mall format.
Retail Tower Planned for Prime Site
Tang, known as Hong Kong’s “shop king” for his sprawling retail empire, has been gradually buying up pieces of the two buildings on the site culminating with his HK$250 million purchase last year of the 1,100 square foot (102 square metre) Kung Wo Tong tea shop on the ground floor of 87 Percival Street.
The billionaire founder of real estate investment firm Stan Group had long ago paid more than HK$100 million to acquire full ownership of the five-storey building at 85 Percival Street, which has since been demolished.
Tang began consolidating 87 Percival Street more recently, with only one piece of the 1954 vintage building still eluding his grasp. The buyer of the property is expected to acquire the remaining unit in the building through negotiation with the holdout owner, or to file an injunction for a sale via the city’s “compulsory sale for redevelopment” process, which allows investors to force an auction of remaining space in a property if they own 80 percent or more of the built area.
Market analysts predict that the new owner will redevelop the combined 2,300 square foot (214 square metre) site into a retail tower with a total floor area of about 34,500 square feet. The new “Ginza-style” property will be modelled after the high-rise buildings dominated by retail and nightlife offerings in Tokyo’s upscale shopping district.
Shopping Goes Vertical in Causeway Bay
The Japanese-derived retail format has been gaining popularity in recent years in Causeway Bay, the world’s second-priciest shopping district. Rents CLSA Capital Partners’ 27-storey Zing! building in Sheung Wan have reportedly grown by 70 percent in just three years, from HK$35 to more than HK$60 per square foot per month.
In June, a subsidiary of mainland state-owned giant China Resources bought a pair of buildings – the Fair View Commercial Building at 27 Sugar Street and the Grand View Commercial Centre at 29-31 Sugar Street – for HK$1.68 billion ($215 million), which real estate agents said the conglomerate was likely to convert into Ginza-style properties for long-term investment, according to the South China Morning Post.
Also in Causeway Bay, international developer Magusta Group completed Oliv, a 24-storey tower with 18 retail floors on Sharp Street East in 2015. Further afield in Kowloon, Link Asset Management invoked the Ginza model when it bought a commercial tower with a retail podium at 700 Nathan Road in Mong Kok for HK$5.91 billion ($760 million) last year, which the manager of Link REIT plans to renovate into a retail and services-dominated building.
“Shop King” Continues Deal Spree
The reported sale of the Percival Street sites marks the third major disposal in less than four months for Hong Kong’s best-known shop owner, who last month was said to be selling the Kings Hotel in Wan Chai to an unknown buyer for HK$1.4 billion ($181 million). Tang also reaped HK$3.1 billion ($396 million) through the sale of three commercial buildings in Kwun Tong and Quarry Bay to a unit of Bank of China in late July.
The tycoon also bought Wan Chai’s Hotel Bonaparte for HK$450 million ($57.5 million) in August, as part of a drive to become one of the city’s leading hoteliers. Including the most recent reported deal, Tang may have transacted a total of HK$5.9 billion ($757 million) of properties since July.
Investment in Hong Kong’s commercial property market reached $3.1 billion in the third quarter, up 27 percent year-on-year, according to a news release from international brokerage JLL.