New World Development has acquired a set of flats in an upscale neighbourhood of Hong Kong for a combined HK$458 million ($58 million), as the developer closes in on another potential redevelopment project.
Land Registry documents reveal that 16 flats and their associated parking spaces at the 66 unit Rose Court project in Kowloon Tong were purchased by Bremont Investments Limited, with the private company paying prices ranging from HK$22 million to HK$33 million for the individual units.
Bremont Investments’ director, Wai Yee Connie Cheng, is also the signatory on Land Registry documentation related to New World Development’s acquisitions at the State Theatre Building in North Point and a development site in Ap Lei Chau, according to the Hong Kong Economic Times.
The Kowloon Tong acquisition represents approximately 24 percent of the property at 23-24 Rose Street, taking New World’s ownership of the building over the 80 percent threshold required for the developer to file for a compulsory sale under Hong Kong law.
Making Way for a 117,000 Sq Ft Project
New World’s latest conquest includes 59,000 square feet of housing by gross floor area spread across four connected buildings in the 52-year-old complex.
More of interest to New World is the 39,000 square foot site’s potential for redevelopment. Zoned for residential use, Rose Court’s site has a plot ratio of three, which allows for redevelopment of up to 117,000 square feet of new homes by gross floor area in a city where government policy has ensured a continual housing shortage over the past decade.
Located in Yao Yat Chuen, a low-density residential area, Rose Court is within ten minutes’ walking distance of both the Shek Kip Mei and Kowloon Tong MTR stations, while the Australian International School and the American International School are both nearby.
New World’s competitor, Wheelock Properties, has already built up a stronghold in the district, with its 32-block Parc Oasis housing estate just south of the City University of Hong Kong, while the developer’s 16-storey luxury tower The Primrose is next to Rose Court.
Launched in 2000, current numbers provided through Centaline Property Agency’s Centadata service shows that the latest transaction price at The Primrose was HK$29 million for a 1,324 square foot unit which changed hands in 2012 at the equivalent of HK$21,903 per square foot.
Fitting Together the Compulsory Purchase Puzzle
With its Kowloon Tong acquisition New World Development is turning to a unit-by-unit acquisition strategy it has used repeatedly this year to acquire redevelopment sites through Hong Kong’s compulsory sale process.
Just three months ago, the developer paid more than double the estimated market value for three shops in Hong Kong’s 67-year-old State Theatre, which brought its ownership of the entertainment complex in North Point to 95 percent as it awaits approval of an earlier application for compulsory purchase of the historic property.
In July, the developer controlled by the family of billionaire Henry Cheng acquired the remaining residential and retail units in four ageing tenement buildings on Ap Lei Chau island for HK$240 million, winning the right to redevelop the site as a residential property of up to 36,000 square feet.
Betting on Hong Kong in the Long-term
New World’s purchase of the Rose Court flats comes despite housing prices in the city having fallen for four consecutive months, according to official data, as Hong Kong struggles with declining interest from mainland buyers and ongoing strife on its streets.
A report by Savills released two weeks ago said that ongoing protests in the city had “cast a cloud over the housing market”.
That cloud showed up in Hong Kong’s luxury property market over the past several months, as sales of properties priced over HK$10 million on Hong Kong island during September fell to just 10 percent of the total recorded in April. In Kowloon and the New Territories transactions of luxury homes fell 54 percent over the same interval, according to the property consultancy.
With the volume of deals falling, prices for high end homes in Hong Kong receded across the board in the third quarter, the authors of the report noted, with luxury apartment prices on Hong Kong Island slipping by 1.7 percent compared to the previous three months while prices in Kowloon and the New Territories fell by 1.5 percent.