香港恒基兆业地产| Henderson Said Ready to Sell HK Office Tower for $1.4B

Henderson boss Lee Shau-kee may soon be able to celebrate one of Hong Kong’s biggest building sales

Hong Kong’s Henderson Land Development is said to be fielding offers of up to HK$11 billion ($1.41 billion) for its new, 22-storey grade A office tower overlooking Victoria Harbour in North Point.

The top-five Hong Kong developer is understood to have received bids from a number of consortiums for the 358,687 square foot (33,323 square metre) property at 18 King Wah Road, with a prospective buyer now conducting due diligence, according to a recent story in Hong Kong’s Sing Tao Daily. The reported offers for the waterfront building amount to HK$30,667 ($3,930) per square foot of gross floor area and are believed to be close to Henderson’s asking price.

If Henderson’s 18 King Wah Road sells for HK$11 billion, it would mark the third-largest property transaction in Hong Kong this year, surpassed by the same developer’s purchase of the Murray Road car park site for HK$23.3 billion ($3 billion) in May and CK Asset Holdings’ HK$40.2 billion sale of The Center in Central last week.

Waterfront Project Converted From Industrial Use

18 King Wah Road is said to be fielding offers of up to HK$11 billion

The project sits on a former industrial site in the eastern region of Hong Kong island, between Causeway Bay and Quarry Bay. Henderson bought the site for HK$620 million in 2005 and converted the property rights to commercial in the third quarter of last year, paying about HK$2.22 billion for the modification premium – around HK$6,729 per square foot of gross floor area.

Construction on the redevelopment project started in November 2014 and the building opened this past August. Henderson is estimated to have invested a total of over HK$4.6 billion ($590 million) to develop the property, including construction and land premium costs. If the asset sells for HK$11 billion, Henderson will record a book profit of about HK$5.4 billion ($692 million).

Mainland Demand Drives Hong Kong Returns

Chinese-backed insurance institutions are said to be prominent among the bidders for the single-owner property near the Fortress Hill MTR station. Henderson, which is controlled by tycoon Lee Shau-kee, declined to comment on the market report.

Lee’s fellow tycoon, Li Ka-shing, profited from that same mainland hunger for Hong Kong assets when CK Assets sold the Center to CHMT Peaceful Development Asia Property, which is controlled by a Beijing-based, privately-held oil and gas firm.

“We understand that a number of PRC investors are reportedly in the final stages of negotiating large en-bloc purchases and we expect some of these to complete,” commented Cathie Chung, Regional Director of Research at JLL in Hong Kong in a statement released today.

Demand from north of the SAR border is also supported ever higher office leasing rates in Hong Kong, with China’s Ping An Bank having agreed in October to pay HK$160 ($20.65) per square foot per month – nearly triple Manhattan office leasing rates – for its new home in Exchange Square.