A rare 999-year leasehold in world’s costliest city makes US government one of Hong Kong’s biggest foreign real estate owners

The US government owns a portfolio of villas, luxury flats in Hong Kong estimated at up to HK$41 billion, making it one of the city’s biggest foreign real estate owners

The crown jewel of America’s ownership is the site of its Consulate General’s office, a leasehold plot that was extended in 1999 to last for almost a millennium, valued at HK$24.7 billion in the world’s costliest commercial district

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The US Consulate General’s office in Central on 13 June 2013. Photo: SCMP

Published: 7:00am, 26 Jun 2020Updated: 12:22pm, 26 Jun 2020

In April 1999, less than two years after Hong Kong returned to Chinese sovereignty, an unusual real estate deal was signed between the city’s administration under then Chief Executive Tung Chee-hwa and the US government.

The contract extended the 75-year leasehold land at 26 Garden Road in Central – provided in 1950 by the former British colonial government to the United States as the American Consulate General’s office in the city – into a 999-year lease for a lump sum of HK$44 million, according to a document from Hong Kong’s Lands Department.

An option stated in the 1950 lease that could allow the US to buy the plot as freehold property was scrapped in 1999 and replaced with the long fixed lease, the government said in response to a South China Morning Post query.

“It is rare to see such long land leases in Hong Kong after 1997,” said Lilian Chiang, senior partner at law firm Deacons. Almost every plot in the city is a leasehold, except for the St John’s Cathedral, she said. The city government’s land sales are for 50-year leasehold terms.

A leasehold title that lasts almost a millennium in the world’s priciest commercial property district values the US Consulate General’s office at HK$24.7 billion, the crown jewel of a real estate portfolio estimated at up to HK$41 billion (US$5.3 billion). That makes the US government one of the biggest foreign property owners in Hong Kong, with its holdings of villas and flats – mostly bought while Hong Kong was a British colony – more than 10 times larger than the HK$3 billion of property registered under Beijing’s representative office in the city.

Image of the Consulate General of the United States of America (US Consulate) (centre front) and the Department of Justice Building (centre back), at the Cotton Tree Drive in Central on 18 August 2018. Photo: Roy Issa

The value of the US government’s holdings in Hong Kong underscores what’s also at stake for America, as President Donald Trump threatens to eliminate special policy exemptions for Hong Kong in retaliation for the Chinese legislature’s draft of a national security law for the city.

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