New World Development has acquired three shops in Hong Kong’s historic State Theatre complex, paying more than double their estimated value as the developer closes in on its redevelopment plans for the 67-year-old theatre.
The listed building, which was put on Docomomo International’s “heritage in danger” watchlist three years ago after Henry Cheng’s company started acquiring parts of it in 2012, is now 95 percent owned by New World Development.
The developer applied for a compulsory sale for the property last October, but has continued to pursue acquisitions while the application remains in limbo.
According to the Land Registry, New World Development bought retail units 15, 16 and 17 at 277-291 King’s Road in North Point for HK$188 million ($24 million), paying a 132 percent premium over a third-party valuation of the property, which would have valued the properties at HK$80.83 million.
Based on the combined gross floor area of 708 square feet (65.8 square metres), the developer has paid HK$265,537 per square foot for the three units, which the existing owner had purchased in 1986 for HK$3 million.
Buying Up a Heritage Building for Redevelopment
Originally known as the Empire Theatre when it opened in 1952, it was rechristened as the State Theatre in 1959 and has long been an icon of Hong Kong popular culture.
Topped by a distinctive set of concrete arches and visible along the street car line which winds through the middle class neighbourhood, the property featured in Bruce Lee’s 1978 film Game of Death, while Taiwanese singer Teresa Teng performed there in 1970.
The six-decade old building is all that remains of the post-war Little Shanghai area, a popular entertainment area at the time. Currently the complex’ theatre portion is used as a snooker hall, with the building also including residences and a shopping arcade.
The value of the property for New World likely derives more from the area of the theatre’s site than from the length of its history.
The State Theatre occupies a 36,200 square foot (3,363 square metre) plot at the corner of King’s Road and Tin Chong Street, and has the potential to yield 362,000 square feet of homes or 525,000 square feet if developed for commercial purposes, according to local media reports.
New World to Preserve Parts of Historic Theatre
The Hong Kong developer, which launched luxury condos in North Point last year, has stated that the State Theatre redevelopment will be the company’s first conservation project.
In an announcement following its application for compulsory sale in October, the developer said that it “has a view to conserve relevant parts of the building” but could only reveal specific details once it had obtained full ownership and conducted a thorough inspection of the structure.
In conjunction with academics, museum curators and conservationists, the developer controlled by Hong Kong’s billionaire Cheng family has already initiated a series of community programmes intended to document the cultural history of the place.
The purchase of these latest units comes after Hong Kong-listed New World had acquired units equal to 12 percent of the building two months ago, paying HK$737 million for the theatre and three ground floor shops.
The sale price was a 20 percent mark-up on the estimated HK$610 million value of the three units and the theatre, based on a third-party valuation of the complex carried out prior to the developer’s application for compulsory sale, according to local media.
North Point Heats Up
The stretch of King’s Road in North Point where the State Theatre is located, running between Causeway Bay and Quarry Bay, was the scene of a big-ticket transaction just three months ago when Gaw Capital agreed to buy 625 King’s Road for HK4.75 billion.
The Hong Kong private equity firm acquired the 26-storey tower, which is located one kllometre east of the theatre on the district’s primary thoroughfare through a vehicle owned by its Gateway Fund VI, paying HK$15,780 per square foot for the 301,065 square foot (27,969 square metre) property.
One month prior to that deal, developer Hang Lung Properties formed a joint venture with its parent company Hang Lung Group to invest HK$2.56 billion for a new commercial project on Electric Road, also in North Point.
Henderson Land Development sold an office tower in Hong Kong’s North Point for HK$9.95 billion last year for the equivalent of HK$30,170 per square foot.
A sales launch at New World Development’s luxury Fleur Pavilia in North Point in June last year saw the cheapest flats offered for HK$19.5 million.