Developer snares rare HK commercial site with $4.2b bid

The coveted site in Hong Kong's Central district, where office vacancy rates are less than 2 per cent. Availability of office space remains tight in the district and landlords are offering little room for rental negotiations, pushing prices higher. F
The coveted site in Hong Kong's Central district, where office vacancy rates are less than 2 per cent. Availability of office space remains tight in the district and landlords are offering little room for rental negotiations, pushing prices higher. Furthermore, mainland Chinese firms have doubled their presence in Central in less than a decade.PHOTO: EUROPEAN PRESSPHOTO AGENCY

HONG KONG • Henderson Land Development snapped up a rare commercial site in the heart of Hong Kong's central business district yesterday for HK$23.3 billion (S$4.2 billion), setting a fresh record for land sold by the government in the city.

It outbid eight other developers, including local giants Cheung Kong Property Holdings and Sun Hung Kai Properties, to win the site in Central district, where office vacancy rates are less than 2 per cent.

The price beat market estimates of between HK$14 billion and HK$22.3 billion. The site in Murray Road, the only plot of large-scale commercial land tendered for sale in the district in two decades, was widely seen as a prime site for a company headquarters, thanks to its location and gross floor area of more than 460,000 sq ft.

The site is currently a public carpark squeezed between two major flagship skyscrapers owned by Li Ka-shing's CK Hutchison Holdings and Cheung Kong Property Holdings.

The sale comes as the availability of office space remains tight in the financial hub and landlords are offering little room for rental negotiations, pushing prices higher.

Mainland Chinese firms have doubled their presence in Central in less than a decade, taking up 21 per cent of all floor space leased in the Central Grade A office market in early 2016, compared with 10 per cent in 2009, according to real estate services firm JLL.

The latest result halts a winning streak by mainland Chinese developers marking their territory in the former British colony, where government intervention is minimum and financing costs are low.

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 17, 2017, with the headline 'Developer snares rare HK commercial site with $4.2b bid'. Print Edition | Subscribe