Corner Building in Hong Kong’s Soho Hits the Market at $22M Valuation

A slice of a residential building in Hong Kong’s once-bustling Soho entertainment district, valued at HK$175 million ($22.3 million) was put up for sale this week, despite the city’s housing market having contracted over the past two months, according to a press release from JLL.

A buyer of nine units – which represent 26.47 percent of the existing building on the corner of Elgin Street and the Mid-Levels Escalator – would be getting a head start on buying out the full building, which could be redeveloped into a retail and residential space with a gross development value of about HK$1 billion ($127.4 million), analysts said.

The property at 49 to 49C Elgin Street, “is surrounded by new residential buildings and serviced apartments such as Caine Hill, Upper Central and (other new) development projects,” said Raymond Fung, executive director of capital markets at JLL in Hong Kong, which is the sole agent for the sale.

“The property has both investment and redevelopment potential,” said Fung, who noted that leasing demand in the area is strong from the city’s young professionals and expatriates. “We expect it will attract interest from developers and investors,” he said.

District Hit By Covid-19 Curbs

The nine residential units made available at the 56-year-old building cover about 3,499 square feet (325 square metres) of saleable area, according to JLL’s press release. If its new owner chooses to pursue full ownership of the property and redevelop it into a retail and residential block, that building could yield up to 38,093 square feet of gross floor area upon completion, said those familiar with the deal.

The six-storey building is located within 15 minutes’ walk from the Central MTR station and about seven minutes from the Lan Kwai Fong entertainment district. However, nearly three years of Covid-19 restrictions and closed borders have devastated restaurants and bars in the Soho area, which has many boarded-up properties and signs seeking new lessees.

“A nearby site (in Staunton Street) was acquired by Wheelock Properties in May for an accommodation value of HK$14,360 per square foot through a compulsory sale for redevelopment,” said Alex Leung, senior director at CHFT Advisory and Appraisal.

That sale’s redevelopment potential has been factored in at a valuation of HK$175 million for 49 to 49C Elgin Street, which translates to a unit price of HK$50,000 per square foot of saleable area in the existing building, Leung added.

Next door to the building, Henderson Land Development over the past year acquired full ownership of the adjacent plots on 33-47A Elgin Street, according to the developer’s latest annual report. It had applied for a compulsory sale of the four buildings covering those addresses in 2019, with the properties valued at HK$963 million.

About three minutes’ walk from that property is Henderson’s Caine Hill, which earlier this month sold three high-level units on the same day, reportedly to the same buyer, for prices which ran from HK$32,772 to HK$34,846 per square foot, according to transaction records posted by the developer.

Also on Hong Kong Island, the developer controlled by the family of billionaire Lee Shau-kee this week acquired the property at 17 to 25 Sun Chun Street in Causeway Bay through a compulsory sale at a reserve price of HK$588.7 million, according to a press release from JLL, which managed the sale.

In December of last year, Henderson acquired a property in Mid-Levels, which is just uphill from Soho, valued at HK$522.1 million through a compulsory sale, which paved the way for the developer to build a luxury residential project on Robinson Road. New flats in Mid-Levels fetch around HK$32,000 per square foot of saleable area, said Leung.

Home Prices Cool

Hong Kong’s mass home prices dropped about 3.9 percent during the first half of the year, according to JLL in its July property market monitor.

Against a backdrop of sliding sales and capital values, the new owner of 49 to 49C Elgin Street would be braving Hong Kong’s cooling residential market alongside developers such as Wheelock Properties, which in May succeeded to acquire the remaining interest in three 1960s properties – valued at HK$529 million – on 47-57 Staunton Street in Soho.

The acquisition has set the developer up to build a more than HK$1 billion residential project in Soho, which refers to its location south of Hollywood Road, with the project expected to yield 40,000 square feet of gross floor area upon completion.