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Kenneth Ko

CHEERWAY Enterprise has completed its $2.14 billion purchase of five office floors at Concordia Plaza in Tsim Sha Tsui East, according to sales agent Cheung Kong Real Estate Agency.

  The deal was agreed to last October, but speculation was rife that Cheerway might opt to default because office prices had dropped substantially.

  Agents said Cheerway's decision to complete the purchase could be positive news, reflecting investor confidence in the prospects for office property.

  Cheerway bought space on floors 22, 23, 25, 26 and 27 of Concordia Plaza, amounting to about 147,000 square feet, together with 20 basement car parking spaces.

  The average purchase price exceeded $14,000 per sq foot for the office area.

  Concordia Plaza is a new, 28-storey, twin-tower project developed jointly by Cheung Kong (Holdings), Sino Land, Nan Fung Development and Tai Cheung Holdings. It provides about 600,000 sq ft of floor space.

  The 59,578 sq ft development site at Cheong Wan Road and Science Museum Road was bought for $1.25 billion at a Government auction in January, 1991.

  Daniel Wong, sales manager for the Kowloon commercial department at Midland Realty, said Cheerway's decision to proceed with its purchase could boost investor sentiment.

  'It should be positive to the market,' he said. 'Cheerway chose to complete the deal, showing its confidence in the market's prospects.'   It is believed that Cheerway intends to hold the office floors for long-term investment.

  Analysts said it would suffer losses if it sold the office space at today's prices.

  Current transaction prices for office premises at nearby New East Ocean Centre were $8,000-$9,000 per sq ft and those at Railway Plaza were $7,500-$8,000 per sq ft, agents said.

  More than half of the office space in Concordia Plaza has been sold to end-users or investors since last year's launch.

  Agents said office space on many of the floors had been put up for lease, drawing rents of about $28 per sq ft a month.

  One agent said some second-hand office spaces in Concordia Plaza had been offered for sale at $9,000 per sq ft but response had been slow.

  Despite recent increases in transactions, agents said investors and end-users remained selective and cautious about buying premises during a slowing economy, and many chose to rent instead.

  The developers of Concordia Plaza still had unsold office floors, but analysts said the developers were split over marketing strategy, with some proposing to hold the spaces for rental purposes, while others wanted to sell them.



Cheerway completes $2.14b purchase of office space in plaza