New World to sell 18 units in Kowloon office building
New World Development is selling 18 units in a recently completed grade A office project in Kowloon.
The project, located at 83 Wing Hong Street in Cheung Sha Wan, was developed by a joint venture between New World and Ares SSG, the local unit of US private equity firm Ares Management, which has a 51 per cent stake in the development.
Ares SSG bought the stake from New World for HK$3.08 billion in September 2022, according to filings made to the Hong Kong stock exchange.
The project has 28 floors, with a total area of 18,946 to 19,216 sq ft on each floor.
The first 18 units, measuring 548 to 1,626 sq ft in gross floor area, were priced from HK$7.2 million to HK$22.7 million, or around HK$12,000 to HK$14,000 per square foot, New World said in a statement yesterday.
The sale comes amid weakening sentiment in Hong Kong’s office market. According to JLL’s monthly report for April, the overall vacancy rate of office buildings rose to 13.1 per cent as of the end of March, partly due to the completion of Six Pacific Place in Wan Chai and Viva Place in Wong Chuk Hang. Rent growth fell by 0.7 per cent month on month as of March 24 to HK$50.60 per square foot per month on average.
It also coincides with a delay in highly anticipated cuts in interest rates by the US Federal Reserve. The Hong Kong Monetary Authority has to conduct its rate policy in lockstep with the Fed to preserve the city’s currency peg with the US dollar.
The delay might stretch into September from earlier expectations of a cut in June after Fed chairman Jerome Powell struck a hawkish tone, saying it could take “longer than expected” to get inflation back on target.
“The office market is expected to remain challenging in the future,” New World said in February during its results announcement for the six months to December 31. “Nonetheless, the group’s strategic penetration in non-traditional business districts in recent years is getting close to harvest time.
“The office buildings in Cheung Sha Wan, a district with well-developed infrastructure in support of its close connection with the Greater Bay Area, shall be better positioned to attract more tenants and become a major business district in Hong Kong.”
Wing Hong Street is a former industrial area that is being redeveloped as a commercial hub. The plot on this street was acquired for HK$2.97 billion in August 2017 and is one of three New World bought that year for a total of about HK$15 billion. The other two projects are 888 Lai Chi Kok Road and 83 King Lam Street.
The disposal of the 18 units also comes after New World sold its shopping centre and parking spaces in Tsuen Wan to Chinachem Group for HK$4.02 billion last month as part of efforts to cut debt and financing costs.