Soundwill concentrates on development and looks to partnerships

Investment company slows down on acquiring old properties to sell on and looks to strategic partnerships with other property owners

PUBLISHED : Monday, 28 January, 2013, 12:00am
UPDATED : Monday, 28 January, 2013, 4:39am

Soundwill Holdings, the investment holding company that has acquired around 100 sites in urban areas to sell on for redevelopment in the past 20 years, has slowed the pace of assembling control of old properties.

Instead, it will focus on forming strategic partnerships with other property owners and developing sites itself.

Vivian Chan Wai-ling, an executive director at Soundwill, said: "Given the difficulties of assembling scattered ownerships in old tenement buildings, we have reduced our exposure to the business since 2009."

The impact on the group's costs of the buyer's stamp duty introduced in October last year, under which non-permanent residents and corporate buyers have to pay a duty equivalent to 15 per cent of transaction prices, was still being assessed, Chan said. But she said she believed acquisition costs would increase

The group is building two "Ginza-style" redevelopments, offering round-the-clock retailing spaces that may be shared by two separate businesses, and two residential projects, Park Haven in Causeway Bay and Warren Woods in Tai Hang.

The retail projects are The Sharp, which sold out all 29 floors on its launch day earlier this month for a total of HK$1.5 billon; and Soundwill Plaza II Midtown, which achieved a monthly rent of HK$100 per square foot, the highest for restaurant tenants in Causeway Bay.

Soundwill has formed a property fund through its wholly-owned subsidiary Soundwill Asset Management and ALPS Real Estate to focus on property investments and development. The Eagle Fund's first project will be a boutique-style luxury residential project at 14-16 Mosque Street in West Mid-Levels.

Chan said: "It is a special vehicle to build the individual project. But if successful we will explore more opportunities with different partners to speed up our expansion through participating in land auctions."

Full ownership of the Mosque Street site, currently occupied by a six-storey residential building with a total of 18 units, was acquired in October 2011. The redeveloped site will provide a total gross floor area of more than 30,000 square feet.

Alfred Lau, a property analyst at investment bank Bocom International, estimated the construction cost of the proposed residential project would be HK$3,000 a sq ft, or HK$90 million excluding land costs.

Soundwill's niche was in such property assembly, Lau said, and if it scaled this business down, this would raise concerns about whether it had a sufficient land bank for future developments.

However, Chan said that the group's existing land bank also included two other projects in Tai Hang and North Point with a total gross floor area of 98,300 square feet, which would be sufficient for new developments over the next five years.

To broaden its income source, she said, the group had also acquired an existing commercial building at 10 Knutsford Terrace, Tsim Sha Tsui, for HK$895 million.

The purchase will expand its investment portfolio to 550,400 sq ft.