SC Capital, Lofter Acquire $53M Project on Hong Kong’s Ap Lei Chau

Singapore-based SC Capital Partners has teamed up with Hong Kong value-add developer Lofter Group to acquire a more than 90 percent interest in a project on Ap Lei Chau island in the Asian financial hub, with an eye towards redeveloping the set of aging buildings.

The acquisition covers three adjoining buildings at 2-4A Ping Lan Street and 26-28 Ho King Street on the triangular chunk of land just off the southwest coast of Hong Kong Island. The partners plan to transform the 4,000 square foot (372 square metre) site, which is surrounded on three sides by parks and gardens, into a housing complex with retail podium spanning 35,000 square feet of gross floor area, according to a statement on Thursday.

Alvin Leung, director of investment management at Lofter, confirmed to Mingtiandi that the partnership will apply for a compulsory sale in order to acquire the remaining interest in the property, with the consolidated value of the existing property estimated at over HK$418 million ($53.6 million), or HK$11,943 ($1,531) per square foot of built space.

“The site is in a core urban area while being surrounded by over 580,000 square feet of park space in Ap Lei Chau Waterfront Promenade and Aberdeen Typhoon Shelter, making the site a unique redevelopment site in Island South,” said Lofter founder and chairwoman Carol Chow. “With distinctive views on the three sides of the site, all residential units of the proposed development can enjoy stunning unobstructed panoramic sea view and greenery view.”

Investment Hotbed

Ap Lei Chau has seen a surge in investment and redevelopment activity driven by the neighbourhood’s ample supply of old buildings, sea views and access to Hong Kong Island via the MTR South Island line, according to Tom Ko, executive director and head of capital markets at Cushman & Wakefield Greater China.

Lofter’s target site, which sits within a three-minute walk of Lei Tung MTR station, is the latest redevelopment opportunity to attract developers and fund managers to an area designated for quality-of-life improvements under the government’s Invigorating Island South initiatives.

HKEX-listed Wang On Properties is developing two projects on Ap Lei Chau under a joint venture with the Netherlands’ APG Asset Management. A combined residential and commercial project at the junction of Wai Fung Street and Main Street will measure about 38,600 square feet of gross floor area, while another project spanning the units from 120 to 126 Main Street will provide 37,000 square feet of floor space.

Just this week, local media reported that Wang On had applied for the HK$200 million compulsory sale of buildings at 17-19 Main Street, 21-23 Main Street and 5B Ping Lan Street.

Other players have included New World Development, which in 2019 paid HK$240 million to secure full ownership of four buildings at 6-8 Ping Lan Street and 26-32 Main Street for redevelopment into a residential property of up to 36,000 square feet.

Urban Renewal Focus

Founded in 2012, Lofter got its start redeveloping industrial properties into studio flats. The group is actively exploring a variety of opportunities for developing urban renewal projects across core districts of Hong Kong, with a focus on Grade A commercial and luxury residential projects, according to Thursday’s statement.

Last year, the group joined forces with local firm Alphalex Capital Management to buy up 57 properties in Kowloon’s Prince Edward area and assemble a HK$1.1 billion ($142 million) residential-with-commercial project.

Lofter’s partnership with SC Capital aligns with the mandate of the Singapore firm’s opportunistic fund series, Real Estate Capital Asia Partners (RECAP), which focuses on value creation through refurbishing, repositioning and operating real estate assets across Asia Pacific.

“The Ap Lei Chau redevelopment project will be an excellent addition to our pan-Asian portfolio and is consistent with our strategy of investing into well-located locations, which fits the fund’s thematic approach,” Suchad Chiaranussati, chairman and founder of SC Capital, said without naming the specific fund. “We are excited to work with our operating partner Lofter Group and its team of seasoned professionals.”