Sino Land and South China seek HK$7b for Central office block
Prospective buyers willing to pay more for whole building rather than taking single floors
Yvonne Liu and Peggy Sito
Sino Land and South China Holdings are trying to sell a 33-storey office building in Central for HK$7 billion rather than by individual floors, to command a higher price for the property.
In December, the companies put on sale 11 upper-level office floors in their jointly owned The Centrium in Soho but found no takers. The average asking price was HK$19,500 per sqft.
This month, the companies decided to sell the entire building for HK$7 billion, which translates into HK$21,212 per sqft.
Joseph Tsang, managing director of Jones Lang LaSalle, the agency handling the sale, yesterday said: "There has been a lot of interest in individual floors at the building. However, we find buyers are willing to offer a higher price per square foot if they get to buy the entire building."
The building is almost fully occupied.
The office and retail tower, built in 2001, is at 60 Wyndham Street. It comprises 31 office floors and has a total gross floor area of 330,000 sqft. The existing rents range between HK$36 and HK$54 per sqft. That will rise to HK$50 per sqft with new leases.
Property agents estimate the rental yield is about 2 per cent, based on the asking price.
Tsang said a number of banks and investment funds had expressed interest in the building.
"I think they are interested in the building as it is in Central. And it is the only one en-bloc building in the district available for sale," he added.
Vincent Cheung Kiu-cho, property consultancy Cushman & Wakefield's national director for valuation, sees the effort to sell the building as a move by developers to strengthen their reserves for future land acquisitions.
"The Centrium is not in core Central. It makes sense for developers to sell while the investment sentiment for commercial property is positive," Cheung said.
The move indicates the developers are trying to sell their non-core assets and use the capital to buy higher-quality sites, say market watchers.
"The asking price is reasonable, taking into account the current value of Central office space and growth potential in the area," Cheung said.
The going rate for office space at 9 Queen's Road Central is close to HK$30,000 per sqft, so an asking price in the region of HK$20,000 per sqft at The Centrium is reasonable, according to Cheung.
The Lan Kwai Fong area was expected to see a development spurt as several new buildings were coming up in the area that would increase the value of property there, he said.