Johnson Electric has sold a converted industrial building in Hong Kong’s Chai Wan for HK$948 million ($121 million), after an attempt to sell the project for HK$1.2 billion via tender late last year failed to result in a sale.
The Hong Kong-listed motor manufacturer disclosed the sale of Johnson Place, a 95,476 square foot (8870 square metre) property at 14-16 Lee Chung Street in the eastern end of Hong Kong to the stock exchange, identifying the buyer only as BVI-registered Fortune Creation Developments Limited.
The sale of the 11-storey facility was the second trade of a project on the street in the rapidly commercialising area of Hong Kong island this month, after the Cha family’s Hanison Construction Holdings acquired the rights to the building next door to Johnson Place earlier in July through a transaction with Blackstone.
Selling Off a Project at the End of the Island Line
Johnson Electric is selling the renovated industrial facility for the equivalent of HK$9,929 per square foot after the 54-year-old property was valued by an independent valuer in May of this year at approximately HK$610 million. The lower three floors of the building, including the ground floor, provide 36,310 square feet of retail space, with the fourth through tenth floors set up as 58,195 square feet of office space.
The property, which is located three minutes walk from the Chai Wan Station at the eastern terminus of the MTR’s Island Line, sits directly opposite Henderson Land’s 36-storey E-trade Plaza commercial complex.
This week’s sale and purchase agreement comes at a price four times the HK$237 million which Johnson Electric paid to purchase the former workshop facility in 1993, with the electrical equipment manufacturer having left the property vacant following the recent renovation.
Adjacent Buildings Could Offer Redevelopment Potential
While the Chai Wan area in general has been attracting more attention from developers, Johnson Place’s specific location at 14-16 Lee Chung Street may have some impact on the property’s value.
Hanison, which is majority owned by the Cha family of Discovery Bay fame, acquired the Minibox Tower, a 68,296 square foot industrial facility at 18 Lee Chung Street, directly adjacent to Johnson Place through its acquisition of the Minibox self-storage business from Blackstone earlier in July. That purchase also included a number of units at 20 Lee Chung Street among Minibox’ assets.
When Hanison announced the HK$735 million acquisition if Minibox, it focused on the value of the company’s real estate, noting that, “the Directors believe that the Acquisition will enable the Group to strengthen and enhance the property investment portfolio.” In addition to the Lee Chung Street assets, Minibox also owns several units at the Kwun Tong Industrial Centre on Kwun Tong Road in Kowloon East.
Located 20 minutes east of Quarry Bay by metro, Chai Wan has attracted increasing interest from investors in recent years as rising property values in more traditional locations drive corporates and residents further down the Island Line.
In October of last year a joint venture between Swire Properties and China Motor Bus Company received approval to redevelop a former bus depot in Chai Wan into a combined residential and commercial project. The partners won approval to build a pair of 36 and 38-storey residential towers totalling up to 440,000 square feet on the site of a former bus depot at 391 Chai Wan Road.