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The Center, at 99 Queen's Road Central, Hong Kong, became the world’s most expensive office building when it changed hands for US$5.15 billion last year. Photo: Nora Tam

Hong Kong’s richest woman, Pollyanna Chu, rents out a floor of The Center to her own company at premium to market rate

  • Level 72 of the city’s priciest office tower has been leased to Kingston Financial Group for HK$109 million (US$13.89 million) over three years
  • The deal would be a salve for Chu and her co-investors, who have struggled to find buyers for the 73-storey building, for which they paid US$5.15 billion

Pollyanna Chu Lee Yuet-wah, Hong Kong’s wealthiest woman, has leased a floor she owns in the city’s most expensive office tower to a publicly traded company she co-founded with her husband for a premium to the market price.

Level 72 of The Center on Queen’s Road Central, owned by Chu, was leased to Kingston Financial Group for HK$109 million (US$13.89 million) over three years, including a three-month rent-free period, according to a statement to the Hong Kong stock exchange.

The Chu family – comprising the financial company’s chairman Nicholas Chu Yuk-yui, chief executive Pollyanna Chu, and executive director Kingston Chu Chun-ho on the seven-person board – abstained from voting on the resolution to approve the tenancy agreement, according to the statement.

The lease on the 26,586 square-foot office works out to about HK$3.3 million a month, including fees for air conditioning and management. The net rent, excluding fees, translates to about HK$115 per square foot, a premium to market price on other high floors in the building.

Renting The Center to Kingston would be a salve for Chu and her co-investors, who have struggled to find buyers for the 73-storey building, for which they paid US$5.15 billion last year in the world’s costliest commercial property purchase. The price of grade A office space in Hong Kong is expected to decline by up to 10 per cent this year, according to data from JLL, as the US-China trade war creates uncertainties for investments, while a crackdown on offshore remittances in China has deterred Chinese companies from setting up offices in the city.

Pollyanna Chu Yuet-wah with her husband Nicholas Chu Yuk-yui, the chairman and executive director of Kingston Financial Group. Photo: Xiaomei Chen
Hong Kong’s economic growth is also expected to have slowed to 3.4 per cent in 2018, from 3.8 per cent a year earlier, creating a “generally weak” environment for investments in commercial real estate, according to a report led by Denis Ma, head of research at JLL.

“The market for prime office space is down in Central because of seasonal factor and the US-China trade war, which makes it difficult for mainland capital to flow to Hong Kong,” said Eric Ong, chief operating officer and director of the commercial department at ­Midland IC&I.

Chu owns seven floors in The Center. An office measuring 4,581 sq ft on a high floor was leased this week for HK$471,843, or HK$103 per sq ft. On December 10, another office with 4,891 sq ft on a high floor in the same building rented for HK$513,506, or HK$105 per sq ft, according to agents.

Rental charges in the building may soon drop below HK$100 per sq ft, tracking the 5 per cent decline that’s expected in the first six months for commercial property in Central, said Ricacorp Properties’ senior sales director Kelvin Ho.

“With the opening of the Central-Wan Chai Bypass [on Sunday], a lot of big companies have moved to Quarry Bay. Some even bigger ones have moved to Kowloon East,” Ho said. “Central’s rent will stay high but there will not be any breakthrough.”

This article appeared in the South China Morning Post print edition as: Pollyanna Chu leases space to family-linked firm
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