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Banking & Finance

1960s-era AIA Building slated for redevelopment into 22-storey grade A office tower, sources say

  • The building will undergo demolition work in March as part of a construction cycle expected to take four years
  • The new building will make use of a campus-like workspace for AIA’s own agents, with amenities to include exercise facilities and rooftop garden
PUBLISHED : Friday, 14 December, 2018, 5:01pm
UPDATED : Friday, 14 December, 2018, 11:23pm

AIA, the largest pan-Asia life insurer, will redevelop its 1960s-era property in Wan Chai into a glass curtain wall grade A office tower with an estimated market value of HK$8 billion (US$1.02 billion) upon completion, according to sources.

“AIA Group has decided to redevelop its commercial property at No 1 Stubbs Road, Wan Chai,” a spokeswoman for AIA said without giving more details. She confirmed the company had leased offices at Hopewell Centre in Wan Chai as a temporary office space for 900 staff and consultants during the redevelopment.

The building, completed in 1967, will undergo demolition work beginning in March as part of a construction cycle expected to take four years, according to a source familiar with the situation.

The redevelopment coincides with the 100th anniversary of AIA’s founding in 2019.

“It is the right timing to revamp the 50-year old iconic building at No 1 Stubbs Road. We did think of refurnishing it but found the maintenance cost to be high while it is hard to install new technology facilities there,” the source told the Post.

“We have thus decided to pull it down and rebuild the whole thing, introducing the latest technology and new design to establish a new icon for the next 100 years,” the source said.

The height and floor space of the new building will remain unchanged from the current 22-storey tower, which features a total gross floor area of about 200,000 sq feet, the source said.

The existing four-floor car park will be spared from demolition.

The redevelopment cost is expected to average HK$7,000 per square foot or HK$1.4 billion in total, according to one property analyst.

“If AIA would lease or sell out part of the floors, it may be valued at between HK$30,000 to HK$40,000 per sq ft or a monthly rental at about HK$50 per sq ft,” said Thomas Lam, executive director of property consultant Knight Frank.

The estimated sale price would bring the building’s value to as much as HK$8 billion (US$1.02 billion).

“The building is located in Wan Chai, but is at a stand-alone location some distance away from shopping and commercial areas. It is close to a cemetery and does not have a sea view, so the value would be lower than other sea view commercial buildings in Wan Chai. After rebuilding, however, it will still be a valuable new commercial building,” Lam said.

The new building will make use of a campus-like workspace for AIA’s own agents, with amenities to include exercise facilities and a rooftop garden with a commanding view of Happy Valley.

“This is to match with AIA’s mission to be a company to promote good healthy lifestyle,” the source said.

AIA was first set up in Shanghai in 1919 by American Cornelius Starr who later expand the business around the world to become American International Group.

During the global financial crisis in 2008, the US federal government took control of AIG under a rescue plan requiring US$180 billion in emergency funding.

AIA was separated and listed in Hong Kong in 2010, raising HK$159.08 billion, a record for an IPO in Hong Kong, according to stock exchange data. AIG sold its remaining stakes in AIA in 2012.

The Stubbs Road office tower acted as the company’s headquarters before the company shifted to AIA Central, which was completed in 2005. Upon its completion 50 years ago, the AIA Building on Stubbs Road was the first commercial tower in Wan Chai.

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