Hong Kong property

Cheung Kong puts The Center up for sale as Li Ka-shing trims Hong Kong assets

The 73-storey office building in Central is being offered for sale at a price of HK$35 billion; deep-pocketed mainland Chinese companies bidding

PUBLISHED : Tuesday, 23 August, 2016, 6:34pm
UPDATED : Wednesday, 24 August, 2016, 11:17am

Hong Kong’s wealthiest man, Li Ka-shing, is putting his tallest building in the city up for sale, garnering bids from several Chinese buyers that point to the increasing trend of mainland companies with deep pockets snapping up local assets.

Li’s Cheung Kong Property Holdings Co has put The Center on the market with little fanfare for six months, according to a property agent involved in the deal, who declined to be named. A handful of keen buyers are bidding on the 73-storey tower, valued at HK$35 billion, the agent said.

At that price, The Center will be Hong Kong’s most expensive real estate transaction.

Analysts point to China’s state-owned companies with deep pockets as the most likely buyers for the tower in downtown Central, which has 1.2 million square feet of office space, 13,000 square feet of retail space and 402 car parking lots.

“Only state-owned enterprises can afford such a sum,” said Knight Frank’s head of valuation and consultancy Thomas Lam.

The building, completed in 1998, is an entire steel structure without a concrete core. Its iconic lobby was featured in the Hollywood movie The Dark Knight.

Cheung Kong owns 48 storeys in the building after Malaysian developer Guoco Group bought 11 floors in 1997. Nine of the 11 floors were sold to Singapore’s DBS Group Holdings Co. in 1998, while Cheung Kong sold the 60th and 79th floors in 1999, according to The Center’s sales brochure.

Li has sold more than 20 billion yuan (HK$23 billion) of commercial properties in Shanghai, Beijing and Guangzhou since 2013. The tycoon’s business empire covers container ports, phone networks, power plants, real estate, retail outlets with assets in Asia, Europe and North America.

Cheung Kong’s officials were unavailable to comment in Hong Kong.

ICBC Asia, a subsidiary of China’s largest bank, is in discussions to buy the Center for HK$34.8 billion, Hong Kong’s Chinese-language media reported on Tuesday. The Hong Kong unit of the Industrial & Commercial Bank of China denied it’s involved in the talks.

Cheung Kong is taking advantage of an explosive demand of office real estate by mainland Chinese companies in Hong Kong, analysts said. The decline in the Chinese yuan against the US dollar has also made it more attractive for mainland banks to seek better returns by parking their capital in real estate.

“Chinese companies are eager to set up headquarters in Hong Kong’s central business district amid rapid business expansion,” Knight Frank’s Lam said. “They will be the key driver of new take up and office acquisition in the coming years.”

Mainland Chinese companies hogged the limelight last year when two of them acquired two office blocks from Hong Kong-based property companies.

China Life Insurance Co., the country’s largest insurer, paid HK$5.85 billion in November last year for Wheelock & Co.’s One HarbourGate office tower and retail podium in Hung Hom. On the same day, China Evergrande Group, the country’s second-largest developer, forked out a record HK$12.5 billion for the 26-storey Mass Mutual Tower in Wan Chai from Chinese Estates Holdings.