HK$1b Causeway Bay block for sale
A local investor is set to release his HK$1 billion retail-residential building in Causeway Bay for tender as commercial property prices in the city go through the roof.
The seller bought the 13-storey building, at 60-62 Yee Wo Street - opposite Paliburg Plaza - for HK$28 million in 1987. Property agents estimate the building has since risen in value to HK$800 million to HK$1 billion.
Land Registry records show the property is owned by Bloomland Company, controlled by Lawrence Lim, an active investor who focuses on commercial properties, and owns several shop and office units in Central and Causeway Bay.
'The value of the building has gone up a lot,' said Stanley Wong, senior director at CBRE, the agency handling the tender. 'There have been several record-breaking transactions in the commercial property market of late, which prompted the owner to release it for sale.'
With low interest rates and rising retail rents, property investors are scouting for commercial buildings and other retail properties, particularly in areas that are top destinations for mainland shoppers, such as Causeway Bay. This has led to a steep jump in commercial property prices.
Last month, a shop with a usable area of 192 square feet at 83 Percival Street was sold for HK$178 million, or HK$927,083 per sq ft, becoming the most expensive retail property in the city in terms of price per sq ft. The price was 257 per cent higher than what the seller had paid in 2009.
A three-storey retail shop at 108 Percival Street was sold by the Yu Ming Group for HK$1.15 billion to a mainlander last month - 229 per cent higher than the price it paid in 2005.
Residential prices have seen strong growth as well. The Monetary Authority has warned of the risks of an overheated market despite a 'potential downside in the economy' led by the euro crisis. Housing prices increased 9 per cent in the first four months of the year, it said. Rents rose too, but at a slower pace, resulting in low rental yields.
Wong said the 13-storey block up for tender had a gross floor area of 28,000 sq ft. Shops occupy its ground floor and mezzanine floor, while residential flats take up the rest of the building. A giant advertising signage on the wall faces Yee Wo Street.
Its occupancy rate is above 90 per cent, generating about HK$800,000 a month for the owner. As it is old, the monthly rents of its flats, ranging between 500 and 600 sq ft in size, are only about HK$10,000 to HK$20,000. Its income potential is expected to go up substantially if it is refurbished.