Leading developer Swire Properties is set to take full ownership of a set of buildings in Hong Kong’s Wanchai district at an auction which values the property for sale at HK$2.06 billion ($263 million). The developer of Pacific Place in Admiralty plans to redevelop the site into a 28-storey, residential-led tower.
A court last week ordered the public tender for the space under the city’s Compulsory Sale for Redevelopment rule, which allows developers to force an auction to buy an entire property for redevelopment if they already own at least 80 percent.
Swire, which applied for the compulsory auction in January 2015, currently owns 87.5 percent of the combined site. The court-ordered reserve price for the target property is believed to represent the largest compulsory sale on Hong Kong Island in the past two years.
Condo Tower To Replace Ageing Buildings
The properties, ranging from 56 to 60 years old, consist of the Po Wah Building at 46-56 Queen’s Road East and the adjacent buildings at 2-12 Anton Street and 5-11 Landale Street. The consolidated site a few blocks west of the Wanchai MTR station covers a total area of 12,700 square feet (1,180 square metres).
Ten individual unit owners are said to hold the remaining 12.5 percent interest in the target buildings not already bought up by Swire, and court documents reveal major disagreements with the developer over the value of the property. The court ordered the auction at a reserve price of HK$2.06 billion, adopting the maximum valuation for the remaining property following a study of the sites.
Swire plans to redevelop the combined sites, which are designated for residential (Group A) use, into a residential and commercial building with a buildable area of around 132,600 square feet (12,319 square metres), given the location’s approved plot ratio of about 10.38. The residential portion, from floors 6 to 27, will span 88,700 square feet (8,240 square metres), while a terrace garden and clubhouse will occupy floors 3 to 5, and a retail podium will take up the basement through second floor.
The court-ordered reserve price equates to HK$12,000 to HK$12,500 ($1,602) per square foot of buildable area for the residential space, and HK$69,700 to HK$77,600 ($9,946) per square foot for the commercial portion.
Swire Achieves Forced Auction Benchmark
Swire Properties is best known for its landmark commercial projects in Hong Kong and mainland China, including the Pacific Place mall, office towers and hotel properties in Hong Kong’s Admiralty, as well as for the the upcoming One Taikoo Place in Quarry Bay. The Hong Kong-listed subsidiary of conglomerate Swire Pacific has a portfolio of around 29.3 million square feet, including 15.1 million square feet of investment properties in its home city, spanning grade A offices, retail, hotels, luxury residences and serviced apartments.
The court-ordered auction for the sites in Wanchai sets a new price benchmark for compulsory sales in recent years, after Henderson Land Development paid the reserve price of HK$1.698 billion ($216.6 million) to buy out the Hoi Hing Building, a decrepit, 53-year-old Kowloon apartment block this past June.
Henderson followed up on its Kowloon move last month by buying out a seven-storey apartment building in the Mid-Levels neighbourhood of Central, in a compulsory sale that valued the entire project at HK$1.05 billion ($134.5 million).