Car park sells for $3bn as Hong Kong real estate bonanza goes up a level
A Hong Kong developer has paid $3bn for an old five-storey car park, the latest indicator of the frenzied state of the territory’s property market.
The sale was the first in the premier Central district since Hong Kong was handed over to China by the UK in 1997. It sets the world’s most expensive city even further apart from international rivals such as New York and London.
Local developer Henderson Land bought a site covering 31,000 square feet, paying HK$50,064 ($6,400) per square foot based on its potential gross footage, once redeveloped. It was a record lump sum for Hong Kong and a record also per square foot.
The company would need to charge as much as $419 per square foot per year in rent for office space — about 50 per cent more than the most sought-after units on the top floors of the city’s premier building, Two International Financial Centre — according to analysts at Nomura who benchmarked it to the yields achieved by Henderson’s rivals.
Office rents have soared in Hong Kong and vacancy rates have remained low as an influx of Chinese tenants has raised prices at Two IFC to as much as $279 per square foot per year. Those rents are 75 per cent higher than the equivalent in New York, which hosts the world’s second-most expensive offices.
But other property experts said that the price Henderson paid for its car park looked more eye-catching than eyewatering when the site’s rarity and Hong Kong developers’ long-term approach were taken into account.
“It seems outrageous but it’s not totally stupid,” said Peter Churchouse, a Hong Kong-based property expert, who estimated the development could yield between 2.5 per cent and 3 per cent.
Prime commercial property in Asian cities such as Hong Kong, Singapore and Tokyo rarely changes hands. Hongkong Land, the property arm of Hong Kongbased conglomerate Jardine Matheson, bought its first plots in Central in 1901 and still owns them today.
Henderson is controlled by Lee Shaukee, Hong Kong’s second- richest tycoon, whose wealth has been put at $21bn by Bloomberg. At 89, Mr Lee is six months older than the city’s richest tycoon, Li Ka-shing, whose Cheung Kong empire also bid for the car park.
The site, at Murray Road, is squeezed between Mr Li’s flagship Cheung Kong Center, home to companies including Goldman Sachs, Bloomberg and Barclays, and his smaller Hutchison House.