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Hong Kong property

Record HK$40.2 billion paid for The Center is ‘reasonable’, Hong Kong investor says

Largest shareholder in consortium is Beijing-based group which wants to be ‘rooted’ in city

PUBLISHED : Thursday, 02 November, 2017, 8:01pm
UPDATED : Thursday, 02 November, 2017, 8:41pm

It was “reasonable” for a consortium of Hong Kong and mainland Chinese buyers to pay a record HK$40.2 billion (US$5.15 billion) for The Center tower, the tallest building in tycoon Li Ka-shing’s property portfolio, according to one of the investors.

Speaking exclusively to the Post, Wing Li Group chairman Lo Man-tuen also revealed that the consortium’s largest shareholder, the China Energy Reserve & Chemicals Group (CERCG), bought the building because it “wanted to be rooted” in the city.

Lo was speaking a day after it was confirmed that CK Asset Holdings chairman Li had sold The Center in what could be the world’s most expensive real estate transaction.

Li Ka-shing sells The Center in US$5.15 billion record deal to trim his flagship’s Hong Kong assets

The buyer of the 73-storey tower, Hong Kong’s fifth-tallest building, is identified as CHMT Peaceful Development Asia Property, incorporated in the British Virgin Islands, according to the stock exchange filings of CK Asset Holdings.

The consortium’s largest shareholder is Beijing-based CERCG, with a 55 per cent stake, industry sources familiar with the transaction said.

The remaining 45 per cent is understood to be owned by a group of Hong Kong businessmen, including David Chan Ping-chi, known as the city’s “king of cassettes” and chairman of Acme Group; the family of Robert Ma Kiu-sang, head of Koon Wing Motors; and Lo, a delegate to the Chinese People’s Political Consultative Conference (CPPCC), the nation’s top political advisory body.

Asked on Thursday if it was he who helped to make the deal possible, Lo said: “Yes, I was one of the directors [of the consortium].”

China’s oil behemoth gets a marquee address at The Center

Under the deal, the consortium had bought 1.22 million sq ft of office space in the building at HK$32,900 per square foot.

On whether the record-breaking deal was worth the money, Lo said: “I can say that HK$32,900 per square foot is reasonable ... Buyers had paid HK$35,000 to HK$55,000 per square foot for units in that building in the past.”

I can say that HK$32,900 per square foot is reasonable
Lo Man-tuen, Wang Li Group

The latest deal set the record for the largest amount of money ever paid for an entire office building in Hong Kong, breaking the mark set by China Evergrande Group, the country’s second-largest developer. That happened two years ago, when it forked out HK$12.5 billion to Chinese Estates Holdings for the 26-storey Mass Mutual Tower in Wan Chai.

But Lo noted that the property, now called the China Evergrande Centre, is much shorter than The Center. “And it’s not in Central, it’s in Wan Chai,” he added.

In terms of price per square foot, the Mass Mutual Tower cost more than HK$36,000 – about 10 per cent more than The Center.

Lo also said the deal showed there was a huge demand for Hong Kong office space from mainland companies. “[CERCG] wants to do business in Hong Kong and be rooted here,” he said.

Ma also confirmed his family was among the investors but claimed they only held “a very small stake”. Declining to comment further, he would only say: “We are eyeing some rental returns from the investment in the long term.”

Hong Kong office market gets fresh impetus from flurry of deals by mainland buyers

Koon Wing is arguably the biggest operator of green minibuses in Hong Kong, owning about 650 vehicles. The company was founded by Ma’s father, Ma Ah-muk. The senior Ma was born in Guangdong province and moved to the city in 1948.

In an interview with local media in 2015, Robert Ma said the family was shifting its focus to property investment because operating minibuses was “a hard business” amid rising costs and a shortage of drivers.

Earlier this year, the Ma family bought 60-62 Yee Wo Street in Causeway Bay for HK$600 million. Other reports claimed the family this year also bought a house on Cumberland Road in Kowloon Tong for HK$110 million.

The family has been active in investing in commercial lots.

In 2015, it was reported that the family bought the Ka Fuk Shopping Centre in Fanling from the Link Reit at HK$588 million.

Media reports late last year stated that the family-owned assets worth a total of HK$30 billion.