Gaw Capital Partners, a Hong Kong-based private real estate equity fund, is transforming an industrial building in Kwun Tong into a modern office building to draw IT clients from the city's traditional business district. "I believe in the CBD2 [second Central business district] concept. I am optimistic about the outlook for the area," said Goodwin Gaw, managing director of the company. Given the growth outlook for Hong Kong's financial and service sectors, as well as large numbers of regional headquarters and regional offices of multinational companies setting up in the city, Gaw believes Hong Kong needs more than one central business district. Kowloon East, comprising the former Kai Tak airport, Kwun Tong and Kowloon Bay business areas, provides approximately 5.4 million square metres of office space, doubling the office space currently available in Central. Gaw Capital bought the building in Wai Yip Street, Kwun Tong, in July this year for HK$950 million. The building, with a total area of 195,531 sq ft, is to be refurbished in line with the government's initiatives to revitalise existing industrial buildings instead of demolishing them. Under a revitalisation policy, introduced in April 2010, older industrial buildings can be revamped through redevelopment or wholesale conversion. The total amount of industrial space that could be converted to other uses is approximately 5.7 million sq ft, according to an August report by property consultant CBRE. Of this, 4.7 million sq ft could be converted to office space, and 40 per cent of that is in Kwun Tong. Edward Law, director of Gaw Capital's asset management division, said the renovation of the company's building would take 18 to 24 months and would start in the middle of next year. The company, which has appointed an architect from the Netherlands, aims to give the 44-year-old building a modern look. Renovation costs are expected to range from HK$1,300 to HK$1,500 per sq ft. "In our experience, we will get higher rents or a greater premium for resale after upgrading the property. In this building, we aim to attract IT companies as tenants," said Gaw, adding that the company would continue to look for investment opportunities in the area.