Hong Kong owners of the world’s most expensive office tower are planning to sell it off floor by floor
The Hong Kong part of the consortium that paid a world-record HK$40.2 billion (US$5.15 billion) for a landmark skyscraper in the city has confirmed it is considering selling some of the floors it bought as the price of office space in the core business district rises sharply.
“While some of the space will be retained either for our own use or for leasing by different partners, some floors may be offered for sale after the completion of the transaction in April,” said Raymond Tsoi Chin-chung, one of four Hong Kong businessmen who together own a 45 per cent stake in the consortium that bought the grade A The Center office tower in November.
The sale of the city’s fifth tallest building by Hong Kong’s richest tycoon, Li Ka-shing, was the world’s most expensive property transaction.
The remaining 55 per cent of the consortium behind the purchase, named CHMT Peaceful Development Asia Property, is owned by China Energy Reserve and Chemicals Group, a Beijing-based specialist in the storage of oil and natural gas.
Tsoi, the founder of Asia Property Agency, believes the mainland partner may use its space for its office in Hong Kong.
He stressed that a final decision would be made only after the deal is completed at the end of April.
But he said the purchase was a good deal, and is confident office prices in Hong Kong’s Central district would continue increasing.
“Prices for grade A office spaces are rising sharply; prime office spaces have been selling for high prices,” he said.
The cost of office space rose sharply after Henderson Land Development won a government tender for the Murray Road car park building for HK$23.3 billion, or HK$50,064 per square foot in May. That made it the world’s most expensive plot of commercial land.
Then early this month, Henderson Land sold a brand new grade A office in North Point – a non-core business district – for HK$9.95 billion, a record HK$30,169 per sq ft, to Shenzhen-listed financial firm China Create Capital.
Asking prices around the 20th floor of World-Wide House, another landmark office tower in Central, have jumped to HK$60,000 per square foot as a result of the record land sale in Central, said Tsoi.
That is almost double the HK$33,000 per square foot paid by the consortium for CK Asset Holdings’ 75 per cent share – a total of 1.22 million sq ft – of the 73-storey The Center. The remaining 25 per cent of the building is held by a number of different owners.
CK Asset Holdings is Li Ka-shing’s flagship company, and the deal sees him part company with the tallest building in his property portfolio.
Apart from World-Wide House and Nine Queen’s Road Central, Tsoi said most grade A office spaces in Central would be offered for leasing.
“We believe prices and rents for The Center have potential to grow further,” said Tsoi who is a veteran investor in office and retail property.
He is offering his 7,300 sq ft office floor at the Far East Consortium Building in Central for sale for HK$150 million, compared with the HK$108 million he paid for it in 2017.
That would bring him a 40 per cent profit within a year if he managed to sell it.
Daniel Wong, a director at Midland IC&I, a commercial property agency, said such prime office space would be in high demand from companies although there was no concrete offer at the moment.
“As far as I know, companies are interested in buying whole floors at The Centre. But there is no instruction or price indication from any of the owners so far,” he said.
Each floor of The Center has a standard area of 26,000 sq ft (2,415 square metres) and would cost about HK$1.3 billion, something of a steal compared to the prevailing market price for commercial property.