Hong Kong’s Emperor Group Approved to Buy Sai Ying Pun Site at 12% Discount

Hong Kong’s sliding property values are providing Emperor International, the listed development subsidiary of Emperor Group, with an opportunity to consolidate a Western district project at a 12.4 percent discount to 2021 pricing, according to a government decision late last week.

Emperor International on Thursday received approval from the Hong Kong Lands Tribunal for the compulsory sale of 70-76 Queen’s Road West in Hong Kong’s Sai Ying Pun area for a reserve price of HK$242 million ($31.1 million).

The court decision sets Emperor up to build 62 new homes on the site near Hollywood Road Park west of Central at a markdown from the HK$11,918 per square foot that it paid to acquire an adjacent building in 2021.

“For such a small sized site, potential value gain from redevelopment is narrow even in a stable market condition. Given the market sentiment in 2024 was poorer than that in 2021, the drop in value is reasonable,” Alex Leung, chief surveyor at CHFT Advisory and Appraisal, told Mingtiandi.

Queen’s Road West Plans

Emperor plans to merge the ageing property at 70-76 Queen’s Road West with the adjacent site of the former Ko Shing Building, which it acquired through a compulsory sale in July 2021, at a reserve price of HK$259 million, or HK$11,918 per square foot of redevelopment floor area. The company demolished the building at the intersection of Queen’s Road West and Hollywood Road in early 2024.

The developer plans to build a 49,000 square foot (4,552 square metre) project on the consolidated site, with about 62 flats across 21 residential floors above a 2-storey retail portion, according to market sources. The project site is about a five minute walk from Sai Ying Pun MTR station.

“The adjacent site is a corner site which allows higher plot ratio. Upon combining the two sites, the whole land would be benefited from higher plot ratio. The combined site would have a total site area of 5,505 square feet. A large redevelopment site can also improve the efficiency of space utilization as certain common areas could be shared,” CHFT’s Leung said.

Sliding Valuation

The reserve price of HK$242 million for 70-76 Queen’s Road West, a set of three 6-storey tenement buildings completed between 1967 and 1971, was decided based on the redevelopment value of the site as of May 2024, which is 12.4 percent less than the aggregated appraised value of all units in the buildings in October 2021, highlighting the ongoing slide in Hong Kong property values.

Based on the permitted gross floor area of 29,000 square feet for redevelopment of 70-76 Queen’s Road West, the reserve price amounts to HK$8,306 per square foot or 30 percent less than it paid to consolidate the adjacent site four years ago.

The developer held a little over 80 percent of property rights in each of the three target buildings in 2021. Through acquisitions it successfully increased its holdings to over 90 percent before applying for the compulsory sale, with just three units now remaining to be acquired through the auction, after the owners declined to exit via negotiations.

Market Recovers

The court ruling came as Hong Kong home sales are showing signs of recovery. After record low home sales in 2022 and 2023, primary housing transactions recovered to pre-Covid averages last year, while secondary sales continued to lag, according to an analysis by CBRE last month. The property agency anticipates 10 percent home sales growth across the primary and secondary markets in 2025.

Emperor International’s 2024-2025 interim results showed its home sales surged over six times in the April to September period from a year earlier to reach HK$81.9 million, thanks to income from its Central 8 project. All 99 units in the 29-storey boutique residential tower at 8 Mosque Street in the Mid-Levels area have been sold or are under contract, according to the interim report.

Despite the sales upswing, Emperor recorded a net deficit of HK$1.04 billion in the six-month period from fair value losses on investment properties, widening from a net loss of HK$769.2 million a year earlier.

Following closing of its April to September books, Emperor sold out all 123 units in its One Jardine’s Lookout project in Happy Valley, notching HK$1 billion in contracts.

Emperor’s Son Steps Up

Emperor International’s hospitality arm, Emperor Entertainment Hotel this month announced founder Albert Yeung’s son Alexander Yeung Ching Loong as executive director and vice chairman of the board.

The younger Yeung will also replace Vanessa Fan Man Seung as chairperson of the hotel unit’s executive committee as Fan steps down.

This appointment comes with the retirement of long-serving Wong Chi Fai from his executive director roles at Emperor International Holdings, Emperor EH, Emperor Capital Group and Emperor Culture Group. The Emperor Group subsidiaries said in filings that Wong would retire “due to his desire to devote more time on his personal interests and affairs on reaching retirement age.”

The leadership changes will take effect April 1.

Alexander Yeung, aged 38, already holds multiple roles across Emperor Group. He is an executive director and vice chairman of Emperor International and also serves as chairman and executive director of both Emperor Culture Group and of furniture  retailer Ulferts International.

Emperor Entertainment Hotels operates the Grand Emperor Hotel casino in downtown Macau, and also manages the Inn Hotel in Macau. The company also runs other hotels and serviced apartments in Hong Kong.

In November, Emperor EH agreed to sell The Unit Davis, a 57-unit serviced apartment block in Hong Kong’s Kennedy Town area, for an agreed property value of HK$275 million ($35.4 million), after the property’s value fell by nearly half in two years.