Wang On Properties looks set to add another suburban residential project to its pipeline as the Hong Kong-listed developer has been identified as the buyer behind the recent HK$580 million ($74.5 million) purchase of a more than 80 percent piece of an industrial building in Kowloon East.
The acquisition gives the developer led by chief executive Nick Tang majority control of Block 4 of the Yau Tong Industrial Building in the rapidly redeveloping Yau Tong area and puts Wang On, which saw its role in the deal revealed in the Hong Kong Economic Times, in position to take full ownership of the 167,200 square foot ( 15,533 square metre) structure under Hong Kong’s compulsory sale law.
Wang On, which already owns a piece of the Maya Nouvelle luxury condo project less than 100 metres away through its 50-50 joint venture with Shanghai developer CIFI Holdings, may be eager to reap the potential returns from redeveloping the industrial project’s 41,800 square foot site, after seeing the performance of other projects in the area.
“Yau Tong is undergoing a transformation, with a number of new residential buildings completed, including Maya by Nouvelle, Peninsula East, and Ocean One,” said Alfred Kwan, associate director of capital markets at Cushman & Wakefield Hong Kong, which advised on the transaction. “The completion of this redevelopment project will accelerate Yau Tong’s metamorphosis into a high-end residential area.”
Yau Tong Makeover
The developer’s reported purchase of the four-storey building would add to its pipeline of upscale housing projects in Hong Kong as luxury home prices in the city are set to rise as much as 5 percent in 2022, according to a report by property services Knight Frank last month.
Located at 18-20 Sze Shan Street, the Yau Tong Industrial Building is just a 1-minute walk from the Yau Tong MTR station in the community at the southeastern end of Kowloon, with the buyer paying HK$4,100 per square foot for its chunk of the existing structure, according to Cushman & Wakefield.
If Wang On succeeds in gaining both full ownership of the property and government approval for redevelopment, a new luxury project replacing the 43-year-old industrial building could be worth as much as HK$5 billion upon completion, said Tom Ko, executive director and head of capital markets at Cushman & Wakefield Hong Kong.
Assuming that Wang On can win approval to boost the current plot ratio of 4 to the area’s maximum of 6, its new project could yield up to 250,000 square feet of floor area, according to Ko, who noted that residential units in Yau Tong currently sell for as much as HK$20,000 per square foot of saleable area.
Housing Fever Returns
The acquisition potentially adds a third project to Wang On’s existing Kowloon pipeline just four months after the developer’s purchase of a residential site on Ming Fung Street through a compulsory sale for redevelopment.
Wang On had 142,500 square feet of mixed residential and commercial space under development in Kowloon’s Wong Tai Sin and Tai Kok Tsui areas as of 31 October 2021, according to the developer’s most recent interim report. Should it win the right to redevelop the Yau Tong property, that project would boost Wang On’s existing Kowloon residential pipeline by as much as 175 percent.
That pipeline includes a pair of Tai Kok Tsui sites Wang On acquired a year ago, 50-62 Larch Street and 6-8 Lime Street which can yield a gross floor area of 61,500 square feet and are already undergoing foundation work, according to the report.
As of 30 September of last year, Wang’s On’s Maya Nouvelle JV with CIFI had sold 310 out of the 326 available units, with aggregate sales proceeds amounting to about HK$3.9 billion.
Building a Residential Brand
With at least seven residential and mixed-use properties currently under development in Hong Kong, of which three were acquired in the past year, the developer is set to deliver more projects within the next three years, with the earliest completion scheduled for this year according to its interim report.
Its recent purchase in Yau Tong came following the developer’s announcement of a HK$4.6 billion residential joint venture with a fund managed by Netherlands’ APG Asset Management in November.
The Ming Fung Street project which Wang On had acquired in September of last year will become part of its boutique residential brand series, The Met, with demolition work to begin in the first quarter of 2022.