Soundwill Holdings sell 29 shopping units at The Sharp, Causeway Bay
Forget car parking spaces; developer makes 29 sales on first day at 'Ginza-style' development
Car parking spaces are passe. Savvy property investors are moving up, so to speak.
After the buying frenzy of parking spaces that followed the introduction of new buyer's stamp duties in October, upper-floor retail spaces are now all the rage.
The Sharp in Causeway Bay, owned by Soundwill Holdings, is a prime example. The developer managed to sell 29 shopping units in the very first day of sale on Thursday, with the price averaging HK$33,576 per square foot. The unit that fetched the most is on the top floor with a roof. It sold for HK$80.47 million, or HK$48,100 per square foot.
The proposed "Ginza-style" commercial building, to be completed by 2015, is on Sharp Street, just off Russell Street, which is the most expensive retail strip in the world. Each floor has a gross floor area between 1,567 sq ft and 1,586 sq ft.
"Most buyers are Hong Kong investors moving away from residential property," said a property agent who declined to be named.
Ample liquidity and low interest rates have encouraged investors to shift to property but because of greater policy risks in residential property investment, they are now focusing on the commercial sector, said Midland Realty director Tony Lo, head of the retail shops division.
Subdivided units of a shopping centre in Tsim Sha Tsui echoed that sentiment. In the past two days, investor Wan Pak-kuen has sold 200 small retail units at The Capital, formerly known as DNA Galleria, part of the Park Hotel on Chatham Road.
Sixty of the units were sold on Thursday through Midland, which varied in size from 56 sq ft to 116 sq ft for HK$3 million to HK$7.65 million each.
Wan last year paid HK$1.92 billion to buy the three-storey DNA Galleria and subdivided it for resale. Former tenants of DNA Galleria were required to move out by the end of last year.
Lo expects investors to continue to pile into upper-floor shopping spaces because of limited investment channels and strong liquidity.
Investors who used to buy residential units now find commercial properties more appetising for their smaller lump sum, according to Patrick Chow Moon-kit, the research head of agency Ricacorp Properties.
"Investors jumped into parking spaces last year but the frenzy has fizzled out because of the lack of real demand. Small-sized retail shops are the 'in' thing," said Chow.
But he warned of potential investment risks in subdivided shops in view of a possible shortage of tenant demand.
According to Ricacorp, 220 upper-floor shops were sold in November, up from 170 in October. But the number retreated to 184 last month. But Chow said he expects to see more transactions in this sector in the near future.