Wheelock Clinches $93M Buy of South Hong Kong Island Building at Forced Auction

Wheelock Properties has acquired an industrial building in Hong Kong’s Wong Chuk Hang area for HK$728 million ($93.4 million), more than two years after applying for a compulsory sale of the ageing property.

The purchase of the Ha Lung Industrial Building was completed at an auction held Thursday, Wheelock Properties said in a release. Having unified the ownership, the builder controlled by billionaire Peter Woo plans to redevelop the asset into an “industrial and trade project” with up to 117,500 square feet (10,916 square metres) of floor area.

The 1972-vintage building in the Southern District marks the first industrial site acquired by Wheelock in urban Hong Kong Island through a compulsory auction this year.

“The group will continue to increase its land bank through different methods to develop high-quality projects,” the company said.

Pieced Together

Wheelock applied for a forced sale of the property at 52 Wong Chuk Hang Road in May 2022 as the developer sought to acquire the remaining pieces after reportedly purchasing the entire first floor from “King of Cassettes” David Chan for HK$82.8 million in 2021.

With the traditionally industrial area being transformed into an alternative commercial district and hipster-friendly art quarter, Wheelock in April 2021 won the rights to build 750 apartments atop Wong Chuk Hang MTR station on the South Island Line, less than a 500 metre (546 yard) walk to the Ha Lung building.

The industrial property is also about four minutes’ walk from One Island South, a 29-storey office tower Wheelock completed in 2011. The developer could build a new industrial project on the site or pay a premium to build another office building in the area, Cushman & Wakefield capital markets head Tom Ko told Mingtiandi at the time of the application for compulsory sale.

Also in Wong Chuk Hang, Sino Group in January 2022 announced the leasing launch of its 256,957 square foot commercial project, Landmark South, developed under a 60:40 joint venture with the Walter Kwok-founded Empire Group. The 30-storey Grade A building was completed in July of that year.

More Office Pain

The vacancy rate of Grade A offices in Hong Kong edged up 0.1 points in June to 13.6 percent as occupiers gave back 53,700 square feet more than they took up, according to JLL’s latest Market Monitor report. Vacancy in the prime Central district crept up 0.1 points to 12.1 percent.

Net effective rents of Grade A offices averaged HK$49.70 per square foot per month, down 0.6 percent from May, resulting in a first-half decline of 4.3 percent.

“Among the major office submarkets, Central and Kowloon East saw further rent decreases of 0.8 and 0.6 percent, respectively,” said Cathie Chung, senior director of research at JLL. “Rents also fell in the Tsim Sha Tsui and Kowloon East submarkets, declining by 0.3 and 0.4 percent, respectively.”