Wang On Selling Ap Lei Chau Property to JV With APG for $70M

Hong Kong developer Wang On Properties will sell a building at 128-130 Main Street on Ap Lei Chau island to its joint venture with Dutch fund manager APG for HK$554.8 million ($70.6 million), with the partners planning to redevelop the property and an adjacent site already held by the JV into a single mixed-use project.

The combined properties at 120-130 Main Street represent two of the five “seed projects” under the JV, which was announced last November and will invest up to HK$4.6 billion acquiring residential properties in the city for redevelopment and future sale.

“It is the intention of the WOP Group to redevelop these two seed projects together as residential and commercial/mixed-use property for sale through the JV company,” Wang On Properties chief executive Nick Tang said in a Thursday filing with the Hong Kong stock exchange.

A wholly owned subsidiary of Wang On Properties will be retained as the asset manager of the project to provide services to the JV for a management fee, according to the filing.

Sea Views and Train Access

The combined project on Ap Lei Chau will yield a total gross floor area of 73,000 square feet (6,782 square metres) and have an estimated value of HK$2 billion, according to Tom Ko, executive director and head of capital markets for Hong Kong at Cushman & Wakefield.

Ko pointed to the location’s sea views and proximity to Lei Tung MTR station as selling points making Ap Lei Chau an attractive area for residential development.

Alex Leung, senior director at CHFT Advisory and Appraisal, expects the project to provide 180 to 200 small new homes priced at between HK$8 million and HK$9 million.

“The area along Ap Lei Chau Main Street is one of the very few remaining districts that still retains an old Hong Kong fishing village style, yet is very conveniently located close to the CBD,” Leung told Mingtiandi. “The area is pretty much matured, mixed with old and modern buildings, with railway access and the upcoming shopping malls in Wong Chuk Hang, making redevelopment a very low-risk investment choice for developers.”

Project Pipeline

In addition to 128-130 and 120-126 Main Street, the JV’s seed projects include another in Ap Lei Chau and two Kowloon sites.

Among the Kowloon projects is a development on Ming Fung Street that Wang On acquired through a compulsory sale in August at a price of HK$1.3 billion. That residential project could yield more than 70,000 square feet of new construction area, according to analysts from Savills who spoke with Mingtiandi.

The other Kowloon project comprises the Rainbow House building at 45 Fei Fung Street and 110 Shatin Pass Road in Wong Tai Sin and the adjoining Cheng Fung Mansion at 31-41 Fei Fung Street, with a combined gross floor area of 93,700 square feet.

In Ap Lei Chau, the JV has a combined residential and commercial project at the junction of Wai Fung Street and Main Street measuring about 38,600 square feet of GFA.

Beyond the initial portfolio, within its seven-year term the JV will target additional residential properties that fit the partners’ target criteria of involving sites of at least 3,500 square feet that can yield a floor area of more than 30,000 square feet.