Haunted buildings in Causeway Bay? No, it’s just a price dispute

All units in three adjoining buildings have been sold except for the street level shops which are rented out for between HK$700,000 to HK$900,000 a month

PUBLISHED : Tuesday, 18 July, 2017, 1:01pm
UPDATED : Tuesday, 18 July, 2017, 8:05pm

The sight of three adjoining dilapidated seven-storey residential buildings in the heart of Causeway Bay, one of the Hong Kong’s busiest commercial districts, raises more questions than answers.

That the properties from 45 to 76 Percival Street, a stone’s throw away from Times Square shopping mall, remain unused in one of the world’s priciest district has piqued the curiosity of Hongkongers and tourists.

“The sight of this huge concrete skeleton is definitely not good, especially because it is in the heart of a city. You can’t help but get an impression of haunted buildings in this prime section of Causeway Bay,” says Wang Lei, a mainland Chinese tourist who spent her weekend shopping in Hong Kong.

An investigation by the South China Morning Post showed that most units in the buildings, except the street level shops, have been acquired by different companies since 2013.

But an apparent lack of agreement on the purchase price with owners of the remaining street level shops which command eye-popping rental rates, have kept the units above idle for years.

“The acquisition of the remaining units has been going on for years, and is still ongoing,” said Michael Chik, managing director of agency Sheraton Valuers.

Although most residential units on the upper floors had been acquired by different parties, the progress of assembling the site has been stalled due to the stalemate in the acquisition of the street level shops. The shops remain open for business.

About 14 street level shops along Percival Street are owned by different landlords who had paid high prices for the retail spaces in 2011.

For instance, Rise Wealth Enterprise, a wholly-owned subsidiary of Emperor International, paid HK$380 million for the shop at 76 Percival Street in 2011.

The shop is rented by accessories chain Folli Follie for HK$900,000 per month. Other shops are leased out for between HK$700,000 to HK$800,000 per month. Retail tenants along the street include Sa Sa Cosmetics, 7-11 convenient store, mobile phone retailers such as China Mobile, Three and Smartone.

“It will cost a huge amount to buy out these street level shops and it will definitely take a long time for the negotiation with the owners,” Chik said, adding that the amount could well be worth billions of dollars.

Four years ago, a battle broke out among six parties to acquire individual units at above market price in the three buildings.

It will cost a huge amount to buy out these street level shops and it will definitely take a long time for the negotiation with the owners
Michael Chik, Sheraton Valuers

A private company Kerryford Holdings, according to Land Registry, had bought 166 units.

Kerryford’s last acquisition was three units, with a combined gross floor area of 2,000 square feet, for HK$45 million, or HK$22,500 per square foot, 50 per cent higher than the previous purchase prices.

One case in point involved unit No. 64A on the third floor of Happy Mansion at 62-68 Percival Street. The owner Leung Pui Chung had bought the flat for just HK$20,750 in 1961, according to Land Registry data. He sold it to Kerryford for HK$12 million in 2015.

“It is rare to have a 20,000 square feet site in the centre of Causeway Bay. It is an excellent location, and these old buildings can be redeveloped into a modern retail and office project,” said Kevin Lam, executive director at Cushman and Wakefield.

He said the site would allow for a 130-metre building with about 30 storeys.