Building on its experience developing and managing the neighborhood shopping mall Fairview Park Town Centre in suburban Hong Kong, Fairland Holdings is bringing its commercial real estate expertise closer to the city centre with the conversion of a former office building into a new service-oriented lifestyle hub for the community.
After buying the 13-storey building at 126 Castle Peak Road in 2020, at a time when other investors were keeping to the sidelines, the 48-year-old developer has drawn on the neighbourhood’s industrial history and its emergence as a home for young families to craft a retail strategy aligned with the rapidly rejuvenating Cheung Sha Wan area.
With the property refurbishment completed in December 2022, the company’s bet on the northwest Kowloon neighbourhood, traditionally an industrial centre, looks set to pay off as Fairland has leased up almost 50 percent of the project — dubbed Spark City Cheung Sha Wan — within just three months.
The maiden development in a planned series of Spark City hubs will offer a vertical lifestyle tower to meet the surrounding residents’ daily needs, providing services as varied as F&B, education, health and beauty, as well as spaces to host events and enable co-working.
Fairland picked up the 1982-vintage office building for HK$140 million (now $17.9 million) in August 2020 during the height of COVID-19 disruptions. The HK$5,600 price per square foot was even lower than the going rates for old industrial floors in the vicinity.
“We were bold at a time when very few investors were able to or brave enough to buy, allowing us to negotiate down the price during the very uncertain COVID crisis,” Fairland’s executive director Douglas Wu recalls.
Keen on the area’s transformation and the property’s transit points — a bus stop outside the building and Cheung Sha Wan MTR station six minutes by foot — Fairland set about transforming the dated structure into a service-oriented lifestyle hub.
The old facade with its damaged windows and hanging air-con units gave way to a sleek glass curtain wall. Fairland refurbished all the interior common areas and replaced the electrical, plumbing and elevator machinery in the 25,000 square foot (2,323 square metre) structure.
In a nod to the area’s artisanal heritage in rattan handicrafts, the architect chose rattan as the building’s interior design theme. Local artists and craftsmen fashioned re-interpreted modern rattan features to add evocative accents to the ceilings, lighting and signage.
The result is a new landmark that honours the neighbourhood’s past while complementing the lifestyle of modern families and young professionals.
Fairland chose Cheung Sha Wan as an investment destination after researching the area’s urban renewal profile and improving demographics. Those same perks have also attracted some of Hong Kong’s biggest developers and investors.
New World Development, the top-five builder controlled by the Cheng family, has taken on three major commercial projects in Cheung Sha Wan, including a 363,392 square foot office tower at 83 Wing Hong Street alongside JV partner Ares Management.
Hanison Construction and private equity firm PAG co-own a 23-storey office building at 476 Castle Peak Road, one kilometre up the street from Spark City, and Henderson Land is developing a 125,400 square foot mixed-use project at a URA site in nearby Sham Shui Po, about five minutes’ walk from Cheung Sha Wan MTR station and Spark City.
“Nearly 4,000 recent and upcoming private residential units in the area will attract young families and professionals with higher spending power, more diverse interests and needs,” Wu says.
Spark City’s service-oriented positioning renders the hub less vulnerable to e-commerce competition, as the emphasis is on selling lifestyle experiences, not just products.
This model can show resilience during economic downturns, tapping the strength of consistent local demand in a growing neighbourhood, but also capture customers’ higher spending power and tenants’ business expansion confidence during better times.
For instance, Fairland’s Fairview Park Town Centre in Yuen Long achieved rental increases for 95 percent of lease renewals, with 12 percent rent increases on average annually for 2020 to 2022, despite the COVID-shocked retail market.
At Spark City, the asking rent is around HK$25 to HK$26 per square foot, which is comparable to grade A office buildings in the area and achieving Fairland’s underwriting rent.
“Quality buildings attract quality tenants,” Wu says. “Some moved to our building from older strata-titled buildings in the same neighbourhood, attracted by our better building quality, image and synergistic tenant positioning.”
It’s a winning hand that Fairland aims to replicate with its Spark City Mongkok at 25 Tong Mi Road, opening in the third quarter of 2023 under a similar refurbishment and repositioning strategy, as the developer continues to seek more opportunities to add to the Spark City series.
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