Analysis | Thank you Henderson: Record Murray Road price lifts property values in the neighbourhood
Cheung Kong Property, whose Hutchison House is across the Lambeth Walk from Murray Road, could see its net asset value per share boosted by HK$5, according to JPMorgan.
Henderson Land Development, owned by one of Hong Kong’s wealthiest families, may have done a favour to every land owner in the Murray Road neighbourhood in downtown Central, when it paid a record price for the largest commercial plot to go on market in two decades.
The record HK$23.28 billion (US$3 billion) price paid for the Murray Road land parcel, which topped professional valuers’ highest estimate by almost 6 per cent, would boost Cheung Kong Property Holdings’ net asset value per share by HK$5, according to an analysis by JPMorgan. Cheung Kong, owned by the city’s wealthiest businessman Li Ka-shing, owns Hutchison House, a 22-storey office tower across the Lambeth Walk from Murray Road.
Besides Hutchison House, another building in the vicinity is the CCB Tower, developed by a consortium between China Construction Bank and Lai Sun Development.
Henderson on Tuesday beat back eight rival developers, including a couple of Chinese real estate companies, to buy Murray Road. It plans to develop the site, where a five-storey public car park currently stands, into a “landmark” office tower by 2022, according to a statement by vice-chairman Martin Lee Ka-shing.
Henderson said its total investment, inclusive of the land cost, may exceed HK$26 billion, or HK$55,914 per square foot. The projected investment would be closer to HK$30 billion, according to a projection by Bank of America Merril Lynch, assuming HK$7,000 per sq ft of construction cost.
With a spot rent of HK$140 per sq ft per month, Henderson could get a net rental margin of 2 per cent BoA-ML said.
