Preserving heritage boosts value of Li family home in Mid-Levels, Hong Kong
- Kennedy Terrace in the Mid-Levels is now a 28-storey block of luxury flats worth HK$2.2 billion (US$280 million)
- The HK$400 million conversion of the grade-two listed building retained many of its original features including the old facade
It was a decision that took the Li family, one of Hong Kong’s richest, more than 20 years to make: whether to completely redevelop their grade-two listed historic home, Kennedy Terrace in the Mid-Levels.
Some members of the powerful dynasty were keen to make better use of a building they described themselves as “underutilised”, while the priority of others was to preserve the precious heritage of the family home.
But finally, in 2012, the dilemma was settled and the four-storey building at 6 and 8 Kennedy Road underwent a HK$400 million (US$51.07 million) conversion into the 28-storey block of luxury flats that stands there today.
The project, which took four years to complete, managed to retain many of the original 1927 building’s historic design features including the old facade, bricks, windows, doors and wooden planks of the lower floors.
The family, which includes the chairman of the Bank of East Asia, David Li Kwok-po, has reason to be happy with the redevelopment, which has boosted the property’s value to more than HK$2.2 billion. It had been worth “next to nothing” beforehand, according to Paul Li’s brother, Li Man-on.
The family had described the original building as “underutilised” because three of the four floors were not used at all.
Today’s building comprises 12 flats of 2,859 square feet each, and four duplexes of 3,600 square feet.
It managed to command rent 63 per cent higher per square foot than nearby traditional buildings when it opened in 2016.
Paul Li Man-hong, a fifth generation family member and a former valuer at JLL, said the incorporation of heritage preservation into the redevelopment would have boosted the new building’s value.
He said the flats at Kennedy Terrace could fetch 50 per cent more than adjacent buildings in the area.
“When it comes to property prices, the market price for the building next door (Kennedy Heights) is around HK$40,000 per square foot ” Li said. “I would not be surprised if the unit price for our building can achieve north of HK$60,000 per square foot, if the flats were up for sale.”
With at total saleable area of 36,700 square feet after the redevelopment, he said the 16 flats were now worth more than HK$2.2 billion, or HK$60,000 per square foot.
“But if the duplex units were on sale, I am sure that they would achieve a higher unit price per square foot of saleable area than the simpler units,” said Li.
The flats were allocated to family members, who could decide for themselves whether to lease them.
“Of the 16 large flats, six went for family members’ own use and the other 10 were leased within a year at more than HK$200,000 a month each.
“The rents in the new building can achieve more than HK$90 per square foot, higher than those of adjacent buildings by half.”
The market rate for renting in the adjacent building, Kennedy Heights, is around HK$55 per square foot.
Li attributed the higher value to the “human element” captured by preserving the original character of the property, as well as the short supply of large homes available to rent in the Mid-Levels.
Ivan Ho, chief executive of property investment fund Kailong Group, said the value of heritage buildings can often be multiplied by redevelopment, particularly when combined with preservation.
“Plot ratio, for instance, might have been relaxed after decades,” said Ho. “In this case, the original four-storey Kennedy Terrace has been redeveloped into a 28-storey building.”
The project to overhaul the family home in Kennedy Road was led by Paul Li’s father, Alfred Li Kwok-lung, whose brothers include David Li Kwok-po and Arthur Li Kwok-cheung, a former cabinet member and now chairman of the council of the University of Hong Kong.
The family fortune was built by great-grandfather, Li Shek-tang, who imported rice from Vietnam and ran a shipping company. David Li’s grandfather, Li Koon-chun, took the fortune a step further, founding the Bank of East Asia in 1918, a significant moment as it was the first owned by local Chinese rather than British immigrants.
The family was quickly elevated to be one of the “four major families” of Hong Kong during colonial times.