Haven Court in Causeway Bay
A 63-year-old building in Hong Kong’s Causeway Bay shopping district has been snatched up for HK$3.2 billion ($408.5 million) with local media reports linking the buyer to a mainland developer which plans to develop a “Ginza-style” office and retail project on the site at the intersection of Haven Street and Leighton Road.
A buyer named Tsui Yee, whom local reports have linked to Shenzhen developer Centralcon Properties, agreed to pay Hong Kong-listed Soundwill Holdings about HK$16,200 per square foot of maximum floor area to acquire Haven Court, the company said in a filing with the Hong Kong stock exchange.
Analysts are expecting the new owner of Haven Court to redevelop the property into a 198,075 square foot (18,401 square metre) office and retail project. Upon completion, that development could be worth as much as HK$5 billion, said Tom Ko, executive director and head of capital markets at Cushman & Wakefield Hong Kong.
Ginza in Hong Kong
Haven Court, which is about a 6 minutes’ walk from the Causeway Bay MTR station – three stops east of Central – is zoned for mixed-use development, according to municipal records, and has a plot ratio of 15.
Cushman & Wakefield’s Tom Ko
If developed for commercial purposes, the buyer would be allowed to develop up to 198,075 square feet of gross floor area, or if the new owner chooses a residential strategy, the GFA would be limited to around 118,845 square feet, said the source, adding that the developer might choose a “Ginza-style” strategy to accommodate dining businesses and other smaller tenants, similar to neighbouring buildings.
Ginza-style buildings, which often feature floors of restaurants, bars and cafes, have been hit hard by the coronavirus pandemic and Hong Kong’s subsequent isolation from the rest of the world. Last year, some of the properties emptied out as Covid-19 restrictions devastated the city’s tourism and hospitality sectors, according to a South China Morning Post report.
Causeway Bay Stays Steady
News of Soundwill’s disposal came as transactions of existing office assets totalled HK$1.1 billion in the second quarter of 2022, representing an 85 percent decline from the same period last year, according to a report published by Colliers last month. Over the same period, sales of retail assets fell 79 percent year-on-year to total HK$2.3 billion, said the property firm.
Despite the slide in commercial asset transactions for overall Hong Kong, “Causeway Bay remains the most expensive retail area in Hong Kong,” said Alex Leung, senior director at CHFT Advisory and Appraisal. “Retail rents were stable in the first half of 2022, and the vacancy rate has dropped about 2 percentage points to around 13 percent over the same period,” he said.
Hong Kong’s New World Development is moving closer to launching a HK$14 billion commercial project just 600 metres from Haven Court, having reportedly applied for a compulsory sale for a set of properties at the intersection of Percival Street, Russell Street and Lee Garden Road in May.
Two months earlier, Hysan Development took a step closer to consolidating a HK$7.5 billion commercial project in the district, with its reported HK$24.28 million purchase of a unit at 9A Sharp Street East.
Haven Court spans four plots – three of which cover the existing 10-storey building, and the remaining plot is a parcel of land. Soundwill began acquiring individual units in the building in 2007, and now owns 87.8 percent of the entire site.
The buyer would be acquiring Soundwill’s portion of the Haven Court building, as well as the outstanding units which the developer has not yet acquired, Soundwill said in a stock exchange filing.
Hong Kong-listed Soundwill recorded a loss attributable to owners of the company of HK$807.9 million in 2021, up 334.8 percent from a year earlier.
The company which has a flagship commercial property, Soundwill Plaza, at 38 Russell Street in Causeway Bay, opposite Times Square, also noted in the filing that it expects to bring in a HK$597.7 million gain from this disposal.
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