The Yip Fat Factory Building doesn’t look like much to fight over
Hong Kong’s Lands Tribunal criticised a legal case launched by Sun Hung Kai Properties against a development plan by one of the city’s richest men, describing its move as “delusional” and “vandalism” of the proposed project.
The dispute stems from Biel Crystal founder Yeung Kin-man’s attempt to buy out the remaining space in the Yip Fat Factory Building in Kowloon East’s Kwun Tong area via a successful application for a compulsory sale for redevelopment, after the industrialist had already acquired 84 percent of the ageing factory structure.
Hong Kong’s largest developer by market capitalisation, through its R4 subsidiary (also known as Pawling Limited, which owns 2.8 percent of the building, attempted to block the move by seeking to appeal the government’s permit for the compulsory sale, hypothesising that Yeung might not move ahead with an already approved plan to redevelop the property under Hong Kong’s plan for revitalising Kowloon East.
However, this was given short shrift by the Land Tribunal in its October 11 ruling.
Vandalism and Speculation
“During his oral testimony, the Applicants’ factual witness, Yeung Kin Man, was expressive of severe displeasure with the idea of revitalization and with R4’s vandalising their redevelopment project at all costs,” the Tribunal said.
BIell Crystal’s Yeung Kin Man seems to have made someone at SHKP unhappy (Getty Images)
The Tribunal said it could only rule based on facts and that R4’s argument that Yeung’s plans should be rejected because he could change his mind over his plans to revamp the property was based on “pure speculation”.
“This can literally be called delusional if one is to view and perceive the interactions between the Applicants and R4 in these proceedings with some clarity of mind,” the Tribunal added.
It also refused Sun Hung Kai’s leave to appeal on the grounds that it would not be, “in the interest of justice”. Sun Hung Kai Properties representatives had not responded to inquiries from Mingtiandi regarding the case by the time of publication.
Development Green-Lit
Sun Hung Kai owns two units in Block 1 of the Yip Fat Factory Building and in June it submitted an appeal to the Lands Tribunal against a judgment from earlier this year, which approved an application for a forced auction of the building at a reserve price of HK$2.3 billion ($292 million).
Tuesday’s ruling now gives Yeung the green light to move forward with the compulsory sale which will enable the applicant to consolidate and redevelop the site with adjacent plots on 73 to 75 Hoi Yuen Road and 119 to 121 How Ming Street.
The potential office and retail project would allow for development of 294,560 square feet (27,365.53 square metres) of gross floor area. Development plans for the consolidated project were approved by the Town Planning Board during the first half of the year.
In 2010 Hong Kong revised its compulsory purchase rules to reduce the minimum ownership level from 90 to 80 percent to encourage the replacement of ageing properties. This lower threshold is subject to certain requirements being met, one of which is that the lot cannot be an industrial zone.
Sun Hung Kai had argued that as long as industrial uses are permitted in the area, applicants must hold at least a 90 percent ownership in the building when submitting its application, though Biel Crystal held just 84 percent at the time of its filing.
In its judgment the Lands Tribunal noted that since 2001, the lot had been rezoned from “Industrial (I)” to “Other Specified Uses,” annotated “Business,” or “OU(B)”. It therefore ruled that the lot was no longer in an industrial zone on the date of the compulsory sale application.
At the given reserve price, Biel Crystal would be paying about HK$7,974.60 per square foot of the site’s maximum gross floor area to win full ownership of the 44-year-old building in Kowloon’s Kwun Tong neighbourhood.
Block 1 of the Yip Fat Factory Building, which sits on 77 Hoi Yuen Road, is located less than a 5-minute walk from the Kwun Tong MTR station, and under 10 minutes’ drive from the Kwun Tong bypass.
Valuers representing Biel Crystal in its compulsory sale case in April suggested that the property could be redeveloped into a 39-storey block for non-polluting industrial uses.
Peak Performer
The Biel Crystal founder, who is estimated to have a personal fortune of $11.6 billion, made his fortune developing screens for Apple and Samsung, and the Yip Fat Factory Building is not the only piece of real estate he is planning to redevelop in Hong Kong.
In April the Biel Crystal founder won approval to build a pair of three-storey houses on the Peak’s Pollock’s Path, , a lot he paid HK$2.8bn for in 2016.
While local media in Hong Kong reported that Yeung would get a HK$721 million ($93 million) stamp duty refund on his Peak purchase, because of his redevelopment plans, it appears the property will be for personal use.
“The low-profile billionaire plans to build a big house for his family to live in,” the chief executive of Savills Greater China, who brokered the sale, told the South China Morning Post at the time.
Leave a Reply