Henderson Land and Swire Properties have completed their acquisition of a set of ageing buildings in Hong Kong’s Quarry Bay at a valuation of HK$6.3 billion ($806 million) after securing the remaining spaces at a public auction Tuesday.
The compulsory sale of the remaining space at 16 to 94 Pan Hoi Street and 983 to 987A King’s Road makes the deal for the project the largest ever conducted under Hong Kong’s rules for redevelopment of old structures, with the partners planning to transform the properties into a 487,213 square foot (45,264 square metre) residential project.
A Henderson representative told Mingtiandi on Tuesday that the companies were delighted at successfully completing the acquisition after more than a decade.
“Given the project’s prime location in a well-developed commercial district, we believe there will be demand for both smaller units and larger units,” the spokesperson said. “We will conduct a thorough study to assess the market needs.”
Decade in the Making
At the reserve price set by the Lands Tribunal, the remaining units in the building had been valued at the equivalent of HK$12,951 per square foot. In comments to Mingtiandi last month, when the auction was first announced, Vincent Cheung, managing director at Vincorn Consulting and Appraisal, noted that the valuation for the ageing assets ranked it tops among the city’s redevelopment auctions.
“At HK$6.3 billion, this should be Hong Kong’s largest compulsory sale transaction ever,” Cheung said at the time.
After an earlier application to develop the site for commercial purposes was rejected in 2020, Swire and Henderson later received approval from the Town Planning Board for a pair of residential towers with retail podium.
The partners are expected to develop a set of two residential towers of 28 storeys each above a three-storey podium accommodating commercial space and a clubhouse, according to Alex Leung, a senior director with CHFT Advisory and Appraisal.
Some 368,300 square feet of the project will be dedicated to residential space, with the commercial area limited to about 72,400 square feet, per the plans approved in May of last year.
Quarry Bay has strong potential for capital appreciation and rental income due to the popularity of the area created by decentralisation in recent years, said Cynthia Li, senior director of project strategy and consultancy for Hong Kong at JLL, which conducted Tuesday’s public auction.
“Given the scarcity of supply in the area, the project is likely to benefit from rising property prices in the future,” Li said. “In addition, the area’s proximity to the central business district and its modern amenities make it an attractive location for tenants.”
Swire has now been a player in Hong Kong’s three largest compulsory sale approvals to date, according to Leung.
Earlier this year the company cancelled a scheduled compulsory sale for the Wah Ha Factory Building on Shipyard Lane in Quarry Bay, which would have valued that property at HK$5.13 billion, after the developer acquired the remaining pieces of the project directly.
The next priciest compulsory sale was Swire’s acquisition of the Zung Fu Industrial Building, which is directly adjacent to the Wah Ha Factory Building at 1067 King’s Road, at a HK$5 billion valuation in 2022. Swire has said it plans to consolidate the two sites for development of a new commercial tower.
The Zung Fu Industrial Building site is within 100 metres of Swire’s One Island East office tower, while the Pan Hoi Street/King’s Road site is within 100 metres of the company’s Two Taikoo Place.