Henderson Land Development this week moved a step closer to creating a new luxury residential project in Hong Kong’s Mid-Levels, with its acquisition of a property valued at HK$522.1 million ($66.9 million) through a compulsory sale for redevelopment.
Hong Kong’s third-largest developer by market capitalization, is paying about HK$16,000 per square foot to acquire the remaining space in 94-96 Robinson Road so that it can add the aging building to an adjacent site which it already owns at 98-100 Robinson Road. With the eight-storey building secured, the developer is now preparing to consolidate the two plots for a new project, according to its most recent annual report. Upon completion within six to seven years, the development is expected to yield a total gross floor area of about 60,800 square feet (5,648.5 square metres).
The acquisition of the remaining pieces of the 1963-vintage structure in Central district, which was carried out by Henderson executive director Augustine Wong Ho Ming, comes amid a high-end housing boom that has spurred developers to acquire new sites, according to market analysts.
“The luxury residential market is short of supply, and properties in traditional luxury residential areas are sought after by occupiers and investors,” said Vincent Cheung, managing director at Vincorn Consulting. “These factors are driving developers to acquire sites through compulsory sales, by collecting sufficient interest in the property to apply for a compulsory sale order under the law.”
Henderson Takes Robinson Road
After accumulating ownership of 91.3 percent of the space in 94-96 Robinson Road, the developer last year applied for a compulsory sale of the property, which paves the way for it to purchase the remaining units under Hong Kong regulations that allow investors to buy out other owners in assets of 50 years in age or more once they have acquired 80 percent interest ownership or more.
Henderson’s application for its Robinson Road target was approved in October of this year, reported the Hong Kong Economic Times, which brought the developer closer to being able to unite the developing the 6,361.9 square foot site at 94-96 Robinson Road with the adjoining 5,798 square foot site it had acquired in 2017.
”We have recorded three major [compulsory sales in the Mid-Levels] this year compared to two last year” said Cynthia Li, senior director of projects strategy and consultancy department at JLL, which managed the sale on Henderson’s behalf. The Mid-Levels area is “ripe for redevelopment”, and more cases for compulsory sales in the area are expected to take place in the next few years, Li added.
Once completed, the redevelopment project is expected to span from 94 to 100 Robinson Road, and will be located less than a kilometre from The Richmond, a luxury residential project at 62C Robinson Road which Henderson began marketing for sale in January of last year at prices starting at over HK$6 million each. In 2018 Henderson completed the Wellesley, another residential project on the same strip, at 23 Robinson Road, with units in the building currently trading for HK$32,909 to HK$39,854 per square foot, according to local property listings.
The acquisition this week was announced on the same day that Henderson was reported to have won approval to arrange a compulsory sale of an additional site at 88 Robinson Road, less than 40 metres (43.7 yards) from its latest purchase, with that project valued at HK$1 billion, according to Ricacorp. The company also owns more than 80 percent of 105 Robinson Road, which it could redevelop into more than 105,332 square feet of space, should it secure full ownership of the property, according to its most recent annual report.
The developer’s latest win in the Mid-Levels, one of Hong Kong’s most affluent areas, follows a 131.4 percent year-on-year jump in the number of residential units sold for prices of over HK$100 million during the first nine months of 2021, with 199 such transactions having been recorded during the period, reported JLL.
Robinson Road has in the past month been a hotspot for residential sites, with cash-strapped mainland developer China Aoyuan recording a HK$900 million disposal of its 86.4 percent interest in the Yin Yee Mansion on 63-67 Robinson Road in November.
The purchase of these sites aligns with a 41.9 percent increase in Mid-Levels home sales during November, compared to the preceding month, according to Midland IC&I data. The property agency recorded 40 home sales in the area below Hong Kong’s Victoria Peak last month as low interest rates and hopes of the mainland border reopening boosted buyer confidence.
The quickening sales in the area came as annual residential transaction volumes in Hong Kong are expected to reach a nine-year high in 2021 according to a report published this week by Cushman & Wakefield, which expects 74,600 homes to change hands in the city this year.