Henderson Land Prepares to Add to Mid-Levels Site in Hong Kong

Hong Kong heavyweight Henderson Land has applied for the compulsory sale of an ageing apartment block in the city’s Mid-Levels, aiming to add the asset to a redevelopment site with two already-acquired adjacent buildings.

The blue-chip builder holds 69.23 percent of the ownership of 90-92 Robinson Road, known as Lai Cheung House, after previously picking up the properties at 88 Robinson Road and 94-96 Robinson Road via forced auctions. A valuer appointed by Henderson assessed the 1966-era building’s site value at HK$296 million ($38 million).

Although the ownership threshold for calling a compulsory auction is usually 80 percent for a building this age, recent changes to Hong Kong’s compulsory sale law — which provides a mechanism for majority owners of an old building to force a public auction of the remaining space in the property — allow for the consolidation of adjacent sites into a single application, according to Alex Leung, chief surveyor at CHFT Advisory and Appraisal.

“Henderson now owns approximately 91.67 percent of the total ownership of 88-96 Robinson Road, meeting the threshold for a compulsory sale application,” Leung told Mingtiandi on Friday.

The combined site area of the three buildings is 22,935 square feet, yielding a maximum gross floor area of 114,675 square feet (10,654 square metres), per CHFT calculations. Given its location in a prime area of the western Mid-Levels, the consolidated site is expected to be redeveloped into a residential project with medium to large sized flats, Leung said.

Potential Projects

In a compulsory sale of 63-67 Robinson Road in 2023, a judge of the Lands Tribunal determined that the potential homes would give a gross development value of HK$34,900 per square foot, resulting in a reserve price for the site of HK$18,800 per square foot.

Taking into consideration the current market sentiment and sale prices in the immediate area, CHFT expects Henderson’s completed project to have a gross development value of HK$26,000 per square foot, with an appraised value of roughly HK$11,000.

Apart from the three sites in question, the adjacent 98-100 Robinson Road, occupied by a 1981-vintage building with 16 residential floors, was acquired in 2018 by an entity with the same name as the applicant for the site at 88 Robinson Road, according to Leung.

“This shows the intention of Henderson to add 98-100 Robinson Road to the three sites to make the site even larger by 5,594 square feet, to 28,529 square feet, or a maximum GFA of 142,645 square feet,” he said, potentially giving the consolidated four sites a combined appraised value of HK$11,500 per square foot.

Clock Ticking

Leung noted that since the building covenants of the Lands Tribunal judgements were valid for six years for 90-92 Robinson Road’s two adjacent sites, time is growing short for Henderson to redevelop 94-96 Robinson Road (acquired December 2021) and 88 Robinson Road (January 2022).

“The building covenant could be delayed as they are forming a bigger development site by the recent application,” he said.

The respective reserve prices of 94-96 Robinson Road and 88 Robinson Road were HK$522.1 million (appraisal value of HK$16,413 per square foot) and HK$1 billion (appraisal value of HK$19,477 per square foot). If the Lands Tribunal determines a reserve price of around HK$11,000 per square foot for the combined site, it would be significantly lower than before, Leung observed.