China Evergrande: receivers plan to add value, boost appeal to Hong Kong tower for next auction

The receivers of Evergrande Centre in Hong Kong are seeking to add more value to the 27-storey office-cum-retail tower to increase its appeal to buyers at the next auction, according to people familiar with the plan.

The former Hong Kong headquarters of troubled China Evergrande Group failed to garner bids substantial enough to meet the expectations of the owner when a sale by tender closed in late October, the people said. The property was estimated by real estate agents to be worth at least HK$7 billion (US$897.6 million).

Among other things, the property owner is seeking to bring in new tenants to fill up the lettable space, and is talking to existing occupiers to extend their leases, they added. Efforts are also being made to sign up new advertisers on its giant screen atop the building, they said.

Lightings on the board have been turned off. It previously promoted the Hengchi electric vehicles produced by a manufacturing subsidiary of China Evergrande.

Receivers Tiffany Wong and Kitty Yeung, directors in Hong Kong at global restructuring and management advisory firm Alvarez & Marsal, did not immediately reply to emails seeking comment. Savills, appointed as sole marketing agent in September, also did not reply to a request for comment.

The Evergrande Centre on Gloucester Road was built in 1985 and has a gross floor area of about 345,423 sq ft (32,000 square metres), according to its sale advertisement in September. It includes a lobby, shops, office floors each with a typical size of 12,000 to 14,000 sq ft, plus 55 parking spaces.

The receivers are hoping the grade A building in Wan Chai can fetch a better price with a better value proposition, and as prices recover and foreign capital returns to the city on the promise of border reopening, according to the sources.

China Evergrande: crisis dents home sales while builder fends off creditors

“As we are seeing China is moving to a progressing economy next year, more Chinese companies will tap its expansion plan or new initiatives in Hong Kong,” said Bruce Pang, head of research and chief economist for Greater China at JLL. “It will result in a long-awaited recovery of the city’s cooling office building market.”

Chinese health officials decided to downgrade Covid-19 as an infectious disease from January 8 and will concurrently scrap quarantine requirements for inbound arrivals from then. The moves are the final steps in its zero-Covid pivot that began in early November.

Hong Kong itself has also loosened restrictions on tourist arrivals. Chief Executive John Lee Ka-chiu reiterated this week his aim to fully resume cross-border travel progressively and in an orderly manner from next month.

Evergrande’s local unit lost control of the building after creditors seized the asset to recover their debt. The developer, once China’s biggest home builder by sales, paid US$1.6 billion, or a then-record HK$36,187 per square foot, to acquire the previously known Mass Mutual Tower, from Chinese Estates Holdings in 2015.