Parking is prime in Hong Kong property market

A multi-storey car park in the Central district in Hong Kong, where Henderson Land has bought a billion-dollar site. Jayne Russell / AFP

The most expensive plot of land ever sold in Hong Kong is a public car park squeezed between Cheung Kong Center and Hutchison House, two major flagship buildings owned by the city’s richest man Li Ka-shing.

The HK$23.3 billion (Dh10.99bn) site at Murray Road, in the heart of Hong Kong’s Central business district, is the only plot of large-scale commercial land put up for sale in the area in two decades, and was seen as a prime site for a company headquarters thanks to its location and gross floor area of more than 460,000 square feet.

“The company is optimistic of the long-term prospect of this investment. The site will be developed into a landmark office building with retail facilities and is expected to be completed in around 2022,” Henderson Land, the buyer, said on Tuesday.

Henderson outbid eight other developers to land the property.

Henderson Land, one of the city’s four major property developers, was founded by Hong Kong’s second-richest man, Lee Shau-kee.

The company, which also has investments in at least 14 mainland Chinese cities, does not have its own flagship skyscraper in Hong Kong and analysts expect it to move its headquarters to this new location upon completion.

Office space in Central is the world’s most expensive, according to a CBRE survey released in March, which ranked the rents ahead of those in Beijing districts, Hong Kong’s West Kowloon, London’s West End, midtown Manhattan and Tokyo.

Having effectively forked out HK$50,000 a sq ft, Henderson would need to sell at a price of at least HK$60,000 to recover construction and development costs.

The most expensive office spaces in Hong Kong are currently going for about HK$39,700 (at 9 Queen’s Road, Central).

Q&A: More details on Hong Kong’s current property market:

What does the sale of the Murray Road site indicate about the overall market for Hong Kong commercial property?

“This transaction sends a very positive sign to office prices in Central [district],” said Antonio Wu, the deputy managing director of the property consultancy Colliers International Hong Kong.

So the market has already been buoyant before the record sale?

The sale comes as the availability of office space remains tight in the prestigious Central district and mainland Chinese financial companies are eager to set up offices there, pushing prices ever higher. European and US financial firms, trying to cut costs, reduced their presence in the three-year period to March 2016, according to property consultancy CBRE. During the same three-year period, their Chinese counterparts took up 73 per cent of the total banking and financial sector space expansion in the area, CBRE added.

But demand may be cooling, as only one mainland Chinese company bid for the Murray Road site.

The latest land sale halts a winning streak of prime land plots being acquired by mainland Chinese developers marking their territory in the former British colony. China’s strengthening of capital controls late last year, in an attempt to restrict funds flowing out of the country as the yuan plummeted, could be a factor behind the dampened enthusiasm for the rare Central site.

* Reuters

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