China Resources Acquires Hong Kong Retail Podium from Francis Law for $40M

A real estate arm of state-owned China Resources Group has acquired a retail podium in Hong Kong’s Kwai Fong area from local investor Francis Law Sau-fai for HK$310 million ($39.7 million), with property owners in the Asian financial centre showing signs of stress as the city’s commercial property downturn drags into its fifth year.

With the property said to be fully occupied at the time of the deal, China Resources Longdation, a property investment and management subsidiary of the Shenzhen-based conglomerate, has completed the purchase of KF88, the retail podium of the Wealthy Garden residential building in the New Territories’ Kwai Tsing district.

“Despite the challenging economic environment, retail units associated with community living have shown resilience,” the investment team at Savills, which managed the sale, said in an announcement. “The property being sold has achieved a 100 percent occupancy rate and is considered one of the projects with higher returns in recent years. With a large population in the area, it is believed that the property will continue to generate significant income in the future.”

Law, who sold the four-storey property at a 31 percent discount to the asking price he set when putting the asset on the market one year ago, joins a growing club of Hong Kong’s veteran investors who have been stung by the city’s property slump, with capital values of high street shops having plunged 34.9 percent from 2019 to 2023 and street front retail rents still 70 percent below their 2014 historical peak, according to a report by consultancy JLL.

Asset Sales

The property is the latest in a string of property assets Law has liquidated in the past two years, as a slide in retail property values has accelerated in the face of high interest rates, declining rents and a sluggish shopping recovery.

Law, who began investing in Hong Kong properties in the 1990s, is estimated to have put on the market roughly HK$7 billion worth of properties since 2022, with some HK$4 billion having been sold off, according to data compiled from local media reports.

Some of Law’s biggest disposals of last year include the historic Sunbeam Theatre in North Point which he sold for HK$1 billion, a three-storey retail podium in West Kowloon’s Tai Kok Tsui area which went for for HK$748 million, and a set of several floors in a Kwun Tong industrial complex which brought in HK$381 million.

Law also began marketing the retail podiums of Admiralty’s Fairmont House and Tsim Sha Tsui East’s Inter-Continental Plaza last year, with the two shopping properties having a reported combined valuation of HK$2.4 billion to HK$2.9 billion.

The KF88 property changed hands at HK$14,309 per square foot, after Law had targeted a HK$450 million (HK$20,772 per square foot) deal when he began marketing the property in January 2023.

Located a four-minute walk from the Kwai Fong MTR station at 208 Hing Fong Road, the retail podium has a gross floor area of 21,664 square feet (2,013 square metres). All 11 units in the podium are leased, with restaurants, banks, and a fitness centre among the property’s tenants. Law had reportedly been collecting monthly rent of HK$1.57 million from the property, according to local media accounts.

Hong Kong’s property woes have also led other local investors to put assets on the block recently, including Lai Wing-to, who is marketing his oceanfront mansion on the island’s south side and a pair of commercial buildings in Causeway Bay and Central. The heirs of the late “Shop King,” Tang Shing-bor, are now shopping commercial assets in the Kwun Tong area after having sold off properties worth over $1 billion since the city’s slump began.

IPO Plans

China Resources Longdation acquired the property as a long-term investment, with Cusson Leung Kai-tong, general manager of the company’s asset management division, telling local media that the company expects retail leasing in the city to recover this year.

The acquisition by the state-run investor comes as the company is reportedly aiming to list some of its property assets on the Hong Kong exchange in an IPO which could raise between $500 million to $1 billion, according to media accounts.

The prospective listing would see the company’s Hong Kong office and retail assets, which were reportedly valued at $20 billion, listed as a REIT in 2024 or 2025. Those assets include the China Resources Building, which houses the headquarters of China Resources Group, as well as the Brim 28 retail podium of the Causeway Centre residential building, both located in Wan Chai.

China Resources Longdation’s property portfolio also comprises residential and hotel assets in Hong Kong, mainland China and the All Seasons Place complex in Bangkok, as well as the St. Regis Hong Kong. The company also owns property management firm Synergis, which manages the Elements mall in West Kowloon, as well as jade retailer Chinese Arts & Crafts.

Formerly known as China Resources Property, China Resources Longdation operates independently of Hong Kong-listed property developer China Resources Land, with both being subsidiaries of China Resources Group.