Hysan, Empire to Acquire Half of Henderson Kowloon Project for $780M

Hong Kong-listed Hysan Development and privately held Empire Group have agreed to acquire respective 25 percent stakes in a Henderson Land residential project in Kowloon’s To Kwa Wan area for a combined HK$6.1 billion ($780 million) in capital commitments, according to a Monday filing with the Hong Kong stock exchange.

The investment gives Hysan, famed for its projects in the city’s Causeway Bay area, and Empire, a developer founded by the late Walter Kwok, a former Sun Hung Kai chairman, pieces of the 717,458 square foot (66,654 square metre) project, as analysts predict another 3 percent increase in mass market home prices in Hong Kong with To Kwa Wan becoming a focus of builder attention.

“The URA’s Bailey Street/Wing Kwong Street development project is well located at the centre of To Kwa Wan, a traditional core Kowloon residential area, where active rejuvenation has been undergoing for almost 10 years,” Irene Lee, executive chairman of Hysan, said in the HKEX filing. “With a convenient access to To Kwa Wan MTR station and an ongoing robust revitalisation, the area is an up-and-coming commercial and residential hub in Hong Kong.”

Henderson won a tender last September for the Urban Renewal Authority project along Ma Tau Wai Road between Bailey and Wing Kwong streets for HK$8.1 billion ($1.04 billion), part of a wave of developers buying up redevelopment sites in the To Kwa Wan area west of Kowloon Bay.

Residential Strategy

Hysan, which developed the Lee Garden projects in Causeway Bay, will pay HK$2.06 billion for 25 percent of the aggregate shareholder loans owed by the project company to Henderson and add a further capital commitment of HK$984 million. The investment with Henderson and Empire is in line with Hysan’s strategy relating to residential development business, Hysan’s Lee said.

Empire, currently led by Walter Kwok’s sons Jonathan and Geoffrey, will match Hysan’s capital commitment. Blue-chip builder Henderson Land is retaining a 50 percent stake in the joint venture.

The To Kwa Wan site, which is the URA’s largest redevelopment project in To Kwa Wan, aggregates seven neighbouring plots spanning 79,718 square feet and can yield a maximum gross floor area of 717,458 square feet when finished.

Upon its expected completion between 2025 and 2026, the project could provide about 1,150 homes with a gross development value between HK$16 billion and HK$17 billion, Alkan Au, senior director for valuation and advisory at JLL in Hong Kong, told Mingtiandi last September.

Once completed, selling prices for the project’s residential units are expected to begin at HK$25,000 per square foot, former Knight Frank head of valuation and advisory Thomas Lam told Mingtiandi at the time that Henderson won the URA tender.

Ripe for Renewal

With its proximity to the newly extended Tuen Ma MTR line, To Kwa Wan has become a hotbed for redevelopment, with Hong Kong-listed Kerry Properties buying a separate URA project there in December for HK$5.58 billion.

Last September, developer Grand Ming acquired a housing project on 41-45 Pau Chung Street in the neighbourhood for HK$320 million. In December 2020, Hong Kong Resorts International agreed to purchase the Daily News Centre in the area for HK$310 million.

Apart from the Bailey Street project, the URA owns 10 more redevelopment projects in the area north of Hung Hom and southwest of Kai Tak. Analysts point out that the increased transport connectivity in the area is attracting more developers to redevelopment projects in the area, either through partnerships with the URA or via compulsory sales for redevelopment.

As the URA’s largest residential project in the area, the Bailey Street/Wing Kwong Street venture should set a trend for similar developments in To Kwa Wan, Lam said last September.