Nan Fung Development continues to bet on Hong Kong Island’s luxury residential market, reaching just under 70 percent ownership last month of a set of lane houses in Jardine’s Lookout through a series of purchases which totalled over HK$1 billion ($128.5 million).
The acquisitions set up Nan Fung, which has completed some of the most expensive luxury projects launched in Hong Kong within the last half-dozen years, with the opportunity to build a fresh set of high-end homes in an area of Hong Kong populated by billionaires such as Joseph Lau of Chinese Estates, Gordon Wu of Hopewell Holdings, and family members of Hong Kong’s late “King of Gambling” Stanley Ho.
Nan Fung is buying up the 53-year-old project in Jardine’s Lookout just weeks after setting a record for Hong Kong’s priciest apartment with the HK$639.7 million sale of a home at its Mount Nicholson joint venture with Wheelock Properties in November of last year, with analysts at JLL predicting that luxury home prices in Hong Kong will grow as much as 5 percent this year.
“Although home sales did show a sign of slowdown in the previous quarter, the market for luxury residential properties remained resilient,” said Alex Leung, senior director at local surveying firm CHFT Advisory and Appraisal Limited, who noted that the transaction revealed aging flats in Jardine’s Lookout could fetch high prices when there is redevelopment potential.
On the last day of 2021 Nan Fung and Wheelock sold another unit at Mount Nicholson, with that HK$583.2 million transaction ranking as the second most expensive apartment deal ever in Asia.
Setting Up a Site
Nan Fung paid from HK$42,408 to HK$65,141 per square foot of floor area to purchase each of its 17 units at Jardine Court from their respective owners, according to transaction records from Hong Kong’s Land Registry, and should it succeed in acquiring all of the units, would win control of a 38,400 square foot (413,334 square metre) site.
“Jardine’s Lookout is an area for low-density development on Hong Kong Island. Residents can enjoy easy access to the Causeway Bay commercial district, and therefore the neighbourhood is superior to the Peak and Repulse Bay in terms of convenience,” said Leung.
With the plot at 24-38 Mount Butler Drive permitted for development at a plot ratio of up to 0.75, a new project on the site could yield up to 28,800 square feet of gross floor area.
If developed into new homes of 3,000 square feet each Nan Fung could build up to 13 units on the site, said Vincent Cheung, managing director at local brokerage Vincorn Consulting, who added that the redeveloped property could sell for from HK$80,000 to HK$100,000 per square foot.
Those rates would surpass average selling prices of nearby estates such as Dukes Place, where current prices range from HK$60,000 to HK$77,000 per square foot of saleable area, according to CHFT’s Leung.
“Developers are hungry for residential development projects in Hong Kong, while land supply is scarce,” Leung said. “Most government residential land sales in 2021 recorded transaction prices which were on the upper end of market expectations.”
Luxury Site Frenzy
Hong Kong Island’s upscale neighborhoods have become the focus of land acquisitions in recent months, as developers compete for plots which can yield high end homes.
Just last week JLL announced a compulsory sale of a property at 88 Robinson Road in the Mid-Levels, with that arrangement expected to add one more luxury project to Henderson Land’s portfolio.
Last month, Henderson had acquired 94-96 Robinson Road through a separate compulsory sale which valued that site at HK$522.1 million, with that deal coming after mainland developer China Aoyuan sold its 86.4 percent interest in the Yin Yee Mansion on the same street for HK$900 million in November of last year.
With the market for posh sites looking up, Hong Kong’s Lands Department announced on 31 December that it has put up for sale a residential site in Hong Kong’s exclusive Repulse Bay area with the property expected to fetch as much as HK$1.52 billion.