Henderson Land Development added to its pipeline of home town projects this week as it bought out the remaining space in a pair of aging buildings in Kowloon’s Hung Hom area.
The blue chip developer bought the properties, which constituted the remaining units in a set of buildings on Whampoa Street and Baker Street in Kowloon’s Hung Hom area, through a compulsory sale which valued the addresses at a combined sum of over HK$1.1 billion ($143 million).
The purchase at the public tender allowed Henderson to consolidate the last pieces of a pair of sites measuring a combined 12,625 square feet, which the company has indicated it may combine with other neighbouring properties to create a combined residential and commercial project measuring over one million square feet.
Adding Pieces to a Hung Hom Puzzle
Henderson had applied for the compulsory sale in March after it had already accumulated more than 80 percent of the built area at the properties at 39 and 41 Whampoa Street and 12A to 20 Baker Street in the eastern part of Kowloon City.
Henderson was the only bidder at the public tender managed by property consultancy Savills, which valued the Whampoa Street property, which covers a 7,000 square foot site, at HK$626 million and valued the Baker Street building, which yields a 5,625 square foot site, at HK$496 million.
City law in Hong Kong allows developers to apply for a forced sale of the remaining space in buildings of 50 or more years old, and with the financial hub’s ever-climbing land prices compulsory sales have become a potentially cost effective approach for patient developer to acquire sites, with Henderson among the strategy’s leading practitioners.
At a plot ratio of 9, Henderson would be able to develop the combined properties into 113,625 square feet of space.
However, at press conference following the auction, Henderson Land executive director Augustine Wong Ho Ming, said the company plans to combine the newly acquired sites with properties previously acquired in the area into three separate projects of 367,000 square feet of floor space, according to an account in the Hong Kong Economic Times.
Wong said the company would develop the properties into small and medium-sized units of both residential and commercial space with completion expected within four years and sales to be launched within one to two years.
Aiming for a New Square Mile Project
Wong’s statements at the press conference may have touched upon only a portion of Henderson’s ambitions in Hung Hom.
In the rapidly gentrifying section of Kowloon the company founded by billionaire Lee Shau-kee is hoping to employ a redevelopment strategy similar to an approach it is currently pursuing with a set of sites it acquired in West Kowloon last year.
In that project less than four kilometres west of its most recent acquisition, Henderson is now transforming a set of properties acquired at least in part through compulsory sales into a multi-building, mixed-use project dubbed Square Mile, according to the company’s 2018 final results announcement, as released on 20 March.
Square Mile combines projects on Ka Shin Street, Li Tak Street, Kok Cheung Street, Fuk Chak Street, Pok Man Street, Man On Street and Tai Kok Tsui Road into a residential and commercial development built around an open air plaza for cultural and leisure activities.
In that one million square foot project the company has already launched residential sales for the first two phases, Eltanin•Square Mile and “Cetus•Square Mile, and says that 90 percent of the units in the projects, which cover a combined 350,000 square feet, have already been sold.
In Hung Hom, Henderson has acquired at least 80 percent ownership of properties on Gillies Avenue South and Bulkeley Street near its Whampoa and Baker Street purchases, with the combined site area of the properties covering more than 112,000 square feet, and potential built area adding up to more than one million square feet.
According to the company, it has made plans to implement the Square Mile project approach to creating a combined commercial and residential for its Hung Hom acquisitions and is also considering implementing the strategy in a HK$46 billion Yau Tong Bay project in Kowloon East which it is co-developing with Sun Hung Kai Properties, Hang Lung Development, Wheelock Properties, Central Development, and New World Development.