Hong Kong developer Asia Standard to upgrade office portfolio
Asia Standard International Group hopes to upgrade its image as a landlord of grade A office properties by merging its headquarters building with an adjoining building.
"The merger will enhance the floor plate to about 8,600 sq ft. With such a floor plate, which is considered 'quite spacious' in the area, the combined building can attract bigger multinational companies and effectively upgrade tenant mix and increase rental income," said Phileas Kwan Po-lam, an executive director of Asia Standard. "We can have a grade A office building something like those in Admiralty."
Asia Standard is a medium-sized developer with assets of more than HK$20 billion and a market capitalisation of HK$2.72 billion. It owns investment properties including its headquarters building Asia Orient Tower in Wan Chai. It also runs three-star hotels under the Empire brand, and builds residential properties in Hong Kong and Shanghai.
Last year, the firm bought Fook Lee Commercial Centre, which is next to its headquarters building, for HK$1.1 billion.
"We will spend about HK$300 million to renovate the two buildings, such as linking the two office lobbies into one common entrance area and upgrading the podium facade," Kwan said.
"We hope to increase monthly rents to more than HK$50 per square foot after renovation from HK$30 per square foot now."
The renovation is expected to take more than one year to finish.
According to property consultancy CBRE, leasing activity in the grade A office market strengthened in the first quarter with a net 300,800 sq ft absorbed. Overall vacancy stood at 3.9 per cent.
Improving leasing activity and lower vacancy combined to push up overall rents by 1.8 per cent quarter on quarter.
CBRE expects leasing sentiment in the office sector to remain positive.
"The growing demand from small to medium-sized financial firms for space in Central and the launch of the stock connect scheme will continue to buoy office leasing activities," it said in a report.
"This will provide a solid platform for relevant financial sector and professional services firms to expand their footprint in Hong Kong."
According to another property consultancy, JLL, first-quarter rents in Wan Chai and Causeway Bay rose 0.5 per cent quarter on quarter, against 1.3 per cent growth in Central.
In C-Suite, Kwan shares how a small-sized developer can survive in the real estate market.