Wang On Buys Building Opposite APG JV Redevelopment Project in Hong Kong

Hong Kong developer Wang On Properties has taken over an aging residential building in Southern District’s Ap Lei Chau for about HK$106 million ($13.6 million), with plans to redevelop the property and surrounding buildings into what could become a more than 60,000 square foot (5,574 square metre) project.

The transaction under Hong Kong’s compulsory sale process represents a price of about HK$7,171 per square foot for the project, which is approved for development of gross floor area up to roughly 14,782 square feet. Wang On applied for a compulsory sale of the entire building early last year after acquiring the titles to all but one unit.

Dubbed Nam Tack Mansion, the property at 37-39 San Shi Street sits directly across Main Street from a collection of commercial and residential units that a joint venture of Wang On and Dutch pension giant APG Asset Management acquired in 2021.

Hong Kong-listed Wang On has also scooped up the old properties at neighbouring 17-23 Ap Lei Chau Street and 5B-9 Ping Lan Street, according to a Hong Kong Economic Times report on the Wednesday auction.

Buyout Completed

Completed in 1971, Nam Tack Mansion contains 15 residential units ranging in size from 323 to 388 square feet. The six-storey building is located near the Lei Tung MTR station in the northeast of Ap Lei Chau, a largely residential island connected by bridge to the southern coast of Hong Kong Island.

Wang On filed its application for a compulsory auction in February 2022 after purchasing 95 percent of the building’s titles, with only one owner in the property refusing to sell, according to an account in the Hong Kong Economic Times.

The city’s Lands Tribunal approved the auction in December, an accelerated timetable compared to the usual approval process of 18-20 months, given that the remaining minority owner had died with no named executor.

Under a Hong Kong law designed to encourage the redevelopment of old and vacant buildings, developers can apply to gain full control of a building aged 50 years or older after securing 80 percent ownership.

According to the local media report, the combined redevelopment of the Nam Tack Mansion site along with the adjacent buildings Wang On acquired on Ap Lei Chau Street and Ping Lan Street can provide a gross floor area of more than 60,000 square feet.

Redevelopment Partnership

Wang On’s latest Ap Lei Chau acquisition comes after the group, in November 2021, formed a joint venture with an APG-managed fund to invest HK$4.6 billion in buying residential properties in the city for redevelopment and future sale.

The JV agreed to spend HK$3 billion acquiring four seed projects from the Wang On families of companies, including the properties at 34 and 36 Main Street and 5, 7, and 9 Wai Fung Street in Ap Lei Chau. Located 200 feet northwest of Nam Tack Mansion, the combined project at the junction of the two streets can yield about 38,600 square feet of new construction area.

A few blocks to the west, the JV plans to redevelop a series of properties it bought at 120-130 Main Street into a single mixed-use residential and commercial project expected to have a total gross floor area of 73,000 square feet.

The Wang On APG venture also purchased two seed projects in Kowloon, including a development on Ming Fung Street that Wang On acquired for HK$1.3 billion through a compulsory sale in August of last year, and two adjoining buildings in the Wong Tai Sin neighbourhood. The Kowloon projects have a combined gross floor area of more than 70,000 square feet and 93,700 square feet, respectively.

Urban renewal is gathering steam in Hong Kong, with 167 properties aged 50 years or older undergoing redevelopment in the first 10 months of 2022, rising from 122 during 2021, according to the city’s secretary for development.

Last October, Hong Kong’s chief executive John Lee proposed lowering the compulsory sale application threshold for from 80 percent of the ownership to 70 percent for buildings aged 50 years or older and to 60 percent for buildings at least 70 years old.