New World Development recorded a big-ticket sale last month, selling a block of three high-level floors in an office project in Kowloon’s Cheung Sha Wan area to an unnamed financial institution for HK$1.2 billion ($154.1 million).
With 888 Lai Chi Kok Road set for completion in April 2022, the Hong Kong development heavyweight has now sold some 70 percent of the 28-storey building’s gross floor area after kicking off sales last December, according to information from New World. Savills, which brokered this most recent sale, attributed the brisk activity in part to rising interest in the Cheung Sha Wan neighbourhood.
“Cheung Sha Wan enjoys good potential as a new key business district in western Kowloon as well as in Hong Kong,” said Peter Yuen, managing director and head of investment and sales at Savills, who led the recent transaction at 888 Lai Chi Kok Road.
The grade A office deal came as firms in the city continued to vacate Central for cheaper Grade A office rents in decentralised areas. Kowloon West, which comprises Cheung Sha Wan and Lai Chi Kok, is expected to become a new downtown in Hong Kong, with 1.9 million square feet (176,516 square metres) of Grade A office supply to be completed in the area over the next two years, according to Savills.
Strata Sales Recover
New World’s latest transaction was for floors 29 to 31 of the Cheung Sha Wan tower, measuring 24,626, 22,385 and 20,894 square feet respectively.
Together the 68,000 square foot space changed hands at an average price per square foot of HK$17,500. Including this latest deal, New World has now racked up HK$5.4 billion in sales at the 520,000 square foot project, the developer said in a press release.
The building is a five-minute walk from Lai Chi Kok MTR station and was constructed on the remaining portion of Lot No.6582, a 50-year land grant plot that New World acquired in 2017 for HK$4.03 billion.
In August, NWS Holdings, New World Development’s conglomerate flagship, agreed to purchase floors 18 to 21 in the building for HK$14,130 per square foot, amounting to a total of HK$1.3 billion, according to an announcement to the Hong Kong Stock Exchange.
The University of Hong Kong in May purchased the entire fifth floor of the building for HK$288 million, or HK$11,010 per square foot, reported the Hong Kong Economic Times.
Following the cancellation of Hong Kong’s double stamp duty, a cooling measure used to increase taxes on non-residential properties, two rounds of sales launched by New World last December saw buyers snatch up 74 units at 888 Lai Chi Kok, amounting to a price of HK$1.3 billion.
Transforming Kowloon West
The site was the second of three commercial plots the developer acquired in the West Kowloon area that year, betting a total of nearly HK$15 billion on the future of Cheung Sha Wan as a business hub.
With connections to the Kwai Tsing Container Terminals, Hong Kong International Airport, the Hong Kong-Zhuhai-Macau Bridge and the western stretch of the New Territories, Kowloon West will play a key role in strengthening the trade and business links between Hong Kong and mainland China, Savills’ Yuen said.
Savills expects that over the next two years, 1.9 million square feet of Kowloon West’s Grade A office stock will be completed, accounting for 75 percent of the existing supply in the district.
The property services firm added, however, that Kowloon may not be able to maintain its vacancy levels in the upcoming year, as 2.4 million square feet out of the 3.9 million square feet of supply is expected to be added to the area by 2022.
Staying Afloat in Hong Kong
In the year that ended in June, New World’s contracted sales in Hong Kong totalled HK$42.4 billion, surpassing its HK$20 billion target by more than double.
Aside from the full-floor sales at 888 Lai Chi Kok Road, the developer had sold 105 smaller units in the building as of 30 June.
New World saw a HK$6.6 billion ($850 million) slide in market value in July, following the forced demolition and rebuilding of part of its residential project, the Pavilia Farm complex, due to defects found in its construction.