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Vicwood Group is putting its headquarters building in Sheung Wan on sale for more than HK$1.2 billion, sources say.

The 38-storey Vicwood Plaza is a key property asset of the privately held company, providing more than 400,000 square feet of office and retail space above Sheung Wan MTR Station. The building generated monthly rental income of about HK$6 million, one source said.

'The asking price of the landlord of between HK$1.2 billion and HK$1.3 billion is reasonable,' the source said.

'Buyers will secure a rental yield of above 5 per cent,' he said, adding that the building was now 70 per cent to 80 per cent occupied and could achieve a higher return when it was fully occupied.

Vicwood Group had taken a mortgage of more than HK$1 billion from five banks, including the Bank of China (HK), using the building as collateral, sources said.

Bank of China (HK) declined to disclose information about its mortgage customers. Vicwood Group was not available for comment.

Estate agents said Vicwood Plaza was released for sale by Vicwood Group recently through private negotiations.

The building was in a good location but investors were cautious about bulk purchases as sentiment was weak and the office market was under serious pressure, they said.

The large supply of office space available in Central, mainly at Two International Finance Centre, was expected to have an impact on the Sheung Wan office market.

Agents expected office rentals in Sheung Wan to plunge to about HK$10 per square foot if demand did not pick up.

However, quality commercial buildings could find buyers, they said. In January, Chinese Estates paid the Hotung family HK$1.1 billion for Tung Ying Building in Tsim Sha Tsu.

FPDSavills deputy managing director Raymond Lee Wai-man said investors were still searching for high-yield premises in prime locations.

He said at least 10 potential buyers were in talks for East Town Building and Tung Sang Building in Wan Chai, also owned by the Hotung family. The two buildings are estimated to be worth HK$600 million.

Vicwood Group was established in 1963, mainly for trading timber products and manufacturing plywood. It owns forests in the Philippines and South Africa, and has wood-processing plants and ceramic-tile factories in China.

Vicwood Plaza, bought by the group for about HK$600 million in 1987, was estimated to be worth HK$6 billion at the market's peak in 1997.

The group expanded its presence in Hong Kong's property market during the economic boom in the mid-1990s.

In 1996, it acquired a three-storey detached house of 9,546 sq ft on a 15,910 sq ft site at 18 Henderson Road in Jardine's Lookout, selling it for HK$98 million in 2000.

In 1997, it spent HK$1 billion for a 5 per cent stake in the HK$20 billion residential joint-venture development Island Resort in Siu Sai Wan.



Vicwood Group seeking $1.2b for Sheung Wan head-office building