Hong Kong Resorts International is taking on its second redevelopment project in the last four months after the developer of Discovery Bay agreed to acquire a site at the western edge of Central district for a combined HK$367.3 million ($47.3 million).
The builder controlled by the billionaire Cha family has reached agreements with 17 sellers to enable the purchase of buildings on Hollywood Road and Upper Lascar Row in the Sheung Wan area, aiming to create a new residential project in the rapidly gentrifying neighbourhood.
Known in the industry as HKRI, the company noted in a filing with the Hong Kong stock exchange that the target properties benefit from proximity to Sheung Wan MTR station and that the site “has the potential to be transformed into a residential development capable of generating profits”.
The deal, which could yield up to 28,049 square feet (2,606 square metres) of new housing by gross floor area, comes as recovering investor demand and hopes of an end to the pandemic have driven an uptick in Hong Kong real estate deals.
HKRI’s acquisition gives it the rights to 165-169 Hollywood and 8-12 Upper Lascar on the two parallel streets, which lie just below the Mid-Levels area in one of the territory’s oldest neighbourhoods.
The total site area is 3,134 square feet, with HKRI paying the equivalent of roughly HK$13,094 ($1,686) per square foot of built area to acquire the plot.
The developer has reached sale and purchase agreements with 16 sellers and a preliminary SPA with a 17th, which will give it sole ownership of the properties once completed. The properties consist of 16 shops or residential units, as well as a lane in between Hollywood Road and Upper Lascar Row. All sellers will have delivered the properties by 31 August 2021, HKRI said.
The building at 165-167 Hollywood Road is a four-storey commercial and residential property that was completed in 1955, while 169 Hollywood Road, housing a ground-floor antique shop and four floors of residences, was completed in 1971, according to a local press account.
The 1967-vintage 8-12 Upper Lascar Row is a five-storey block containing 10 apartments ranging in size from 312 to 365 square feet.
The area is zoned Residential (Group A), which is intended primarily for high-density residential developments. Commercial uses are permitted on the lowest three floors of a building or in the purpose-designed non-residential portion of an existing building.
The neighbourhood surrounding the properties is well known in Hong Kong for its many antique dealers and art galleries. Hollywood Road is the second-oldest road in the former British crown colony, after Queen’s Road.
HKRI’s most recently announced deal in late 2020 was another redevelopment bet, albeit across the harbour in Kowloon.
The firm last December agreed to buy a 16-storey industrial building known as the United Daily News Centre in the To Kwa Wan area for HK$310 million. HKRI plans to redevelop the 62,577 square foot building into a new complex that would allow for residential, commercial or combined use.
At the consideration declared, the company paid the equivalent of HK$4,954 per square foot for the property, which occupies a 5,805 square foot site. The seller was a company controlled by Wang Pi-Ly, a son of the founder of the United Daily News, Taiwan’s third-largest newspaper.
HKRI has not been the only developer shopping for redevelopment bargains in Hong Kong in recent weeks.
At the end of February, Lofter Group teamed up with Alphalex Capital Management to pay HK$140 million ($18 million) for 13-15 Ki Lung Street — a deal which gave the partners consolidated ownership of a 7,500 square foot plot near Nathan Road. The redevelopment duo now plan a HK$1.1 billion mixed-use project for the site in Kowloon’s Prince Edward area.
There has been more action in the industrial sector, where policy initiatives introduced in 2020 have led to six en bloc investment deals totalling more than HK$4.4 billion in the city so far this year, according to Mingtiandi figures.
Earlier this month, cosmetics retailer Bonjour Group announced that it had reached a preliminary agreement to sell its industrial building in the Tsuen Wan area for HK$800 million. In late February, fund manager SilkRoad Property Partners agreed to buy a cold-storage facility in the New Territories’ Fanling area for HK$321 million from the Law family, which founded toy manufacturer Smile Industries.