Henderson Land Development has taken another step towards consolidating a 42,506 square foot (3,948 square metre) site in a Hong Kong redevelopment hotbed, having gained approval for the compulsory sale of a property in Kowloon’s To Kwa Wan neighbourhood last week.
The auction under Hong Kong’s law allowing owners holding more than 80 percent of an ageing property to buy out holders of remaining units sets a reserve price of HK$925 million ($118.6 million) on the property spanning 14-16 Ha Heung Road, 1-7 Lai Wa Street and 2-8 Mei Wa Street in the redeveloping Kowloon neighbourhood, valuing the project at about HK$11,148 per square foot of potential floor area.
Should Henderson succeed in gaining full ownership of the property, together with three other properties in the area in which it currently holds more than 80 percent ownership, the blue-chip developer would have the opportunity to develop a combined commercial and residential project in To Kwa Wan which could be worth as much as HK$9 billion ($1.1 billion), according to Alex Leung, senior director at local surveying firm CHFT Advisory and Appraisal Limited. Together, the adjoining plots would yield a project of up to 382,199 square feet of floor area.
The approval would ready Henderson for its second To Kwa Wan compulsory sale purchase in three months, following the developer’s acquisition of an adjacent property valued at HK$962 million in November of last year.
With more than a 90 percent ownership in the property, the developer controlled by the family of billionaire Lee Shau-kee had applied for a compulsory sale of the remaining space in 2018, and has since then added on about 6 percent to its holdings.
The developer is at the same time working to gain full ownership of two more plots on the same block, according to Leung, including 72-76 Lok Shan Road and 72-76B To Kwa Wan Road, as well as 68A-70C To Kwa Wan Road.
“A redevelopment scheme for the consolidated site had been approved by the Buildings Department in the fourth quarter of last year,” said Leung, noting that the developer expects to build a large-scale composite retail and apartment project on site, should it succeed in consolidating the four adjoining properties.
The To Kwa Wan project, which occupies a 9,733 square foot site, is located just 1.4 kilometres (0.86 miles) north of a one million square foot project Henderson is redeveloping in Kowloon’s Hung Hom area. The 8-storey tenement block, which was completed in 1960, has a plot ratio of 8.5, and is eligible for redevelopment into a retail and residential project yielding up to 82,972 square feet of floor area.
To Kwa Wan Expansion
The compulsory sale approval sets Henderson up for further expansion in To Kwa Wan as mass home prices in Hong Kong are predicted to rise as much as 3 percent this year, according to a Knight Frank research report, with the area benefiting from the June 2021 completion of the MTR Tuen Ma line, which connects the neighbourhood to Sha Tin in the New Territories and Central.
With improving transport connectivity in the area, developers are now targeting ageing buildings in To Kwa Wan for landbank replenishment, said Leung.
The approval also came about five months after the developer had won the tender for an Urban Renewal Authority residential project, just a 500-metre (546-yard) distance from the property, for HK$8.1 billion.
That project was this week partly acquired by Hong Kong-listed Hysan and privately held Empire Group, which each purchased a 25 percent stake in the development for a combined HK$6.1 billion in capital commitments.
“The Urban Renewal Authority currently has a redevelopment project in To Kwa Wan with a total gross floor area of about 2.5 million square feet,” said Leung. “The first and second phases were awarded to Henderson and Kerry Properties respectively in the last year, while the tender for the third phase is expected to close on Thursday this week.”
“To Kwa Wan will become one of the main sources of new housing supply in the city,” he added.