Shanghai Industrial Group's massive residential redevelopment of Tien Chu Centre and Nanyang Brothers Tobacco building in To Kwa Wan is underway after New World Development and Cheung Kong (Holdings) acquired a joint stake for $960 million.
Demolition works have begun for part of the buildings in what is to be one of the largest-scale property developments seen in the area.
Based on the $960 million acquisition cost, New World and Cheung Kong together would hold an effective interest of less than 30 per cent of the whole redevelopment site, according to analysts.
The land cost is equivalent to an accommodation value of about $2,600 per square foot, a level described as reasonable by analysts.
If the two developers also were responsible for paying the construction cost for the whole 150,000 sq ft site, New World and Cheung Kong's attributable interest in the project could be higher, they said.
But details of financial arrangement surrounding involvement by the two Hong Kong development giants was still unknown.
Analysts said the whole site could provide a gross floor area of 1.35 million sq ft, including about 225,000 sq ft of retail shopping space.