Concrete Analysis | Henderson can deliver value after winning New Central Harbourfront Commercial Site 3. Here’s how

The government has confirmed Henderson Land Development has paid the full HK$50.8 billion (US$6.5 billion) lump-sum premium for New Central Harbourfront Commercial Site 3. As we know, six tenders passed the design part of the two-envelope approach requirements, but only two met the government’s reserve price.

Regardless of the winner and price, there is a responsibility to deliver value from this sale. Henderson can do this by creating new opportunities, and is likely to plug the site into its existing portfolio in the wider Central area.

Site 3 isn’t game-changing in terms of new office stock. Once completed, it will add 660,000 sq ft to the wider central business district’s (CBD) 18.8 million sq ft net floor area of grade A office space. But, it does offer a large, unique floor plate – something that is relatively limited in other office buildings in Hong Kong. Large companies can lease a single floor in a low-rise building, consolidating all their staff in one area, in the most prime location. There is also potential to develop a more tailored workspace, not defined by the traditional Hong Kong CBD floor plate. We have already seen interest in the space. Don’t be surprised if a large chunk or all of it is snapped up by a significant local or multinational occupier.

It’s important to note that the development complements Henderson’s other assets in Central – International Finance Centre I and II and the Four Seasons Hotel – making it strategically important to the firm.