Central-Wan Chai Bypass elevates the fortunes of working-class neighbourhood of North Point
- Market observers say the tone has been set for North Point after residential and office projects achieve record prices
- Colliers expects prime office rents in North Point and Quarry Bay to grow 4 per cent this year
In Hong Kong’s Eastern District of North Point, the old and the new blend seamlessly together. Alongside new, upscale residential projects and glass-fronted office towers, stand decades-old residential buildings, a bustling wet market and even the State Theatre, a Grade 1 historic building.
Sun Hung Kai Properties achieved HK$61,000 (US$7,777) per square foot for a flat at its new Victoria Harbour development, while Henderson Land Development’s office tower at 18 King Wah Road sold for HK$9.95 billion – both record prices in the area.
The opening in February of the Central-Wan Chai Bypass, a 4.5-kilometre infrastructure comprising a flyover and 3.7km tunnel, has cut down travel time from 15 minutes to five minutes from North Point to Central, elevating the fortunes of the working-class neighbourhood that was once considered too far.
“The opening of the bypass road and changing tenant structure of the Hong Kong East office market is having a positive impact [on North Point] as developers and investors reset their rental and pricing benchmarks for the area,” said Denis Ma, head of research at JLL.
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Property consultancy Colliers International picked North Point as the most to gain from its proximity to the bypass’ exits, noting other transport facilities comparable to Central, including bus and ferry terminals, tram stations, and the second Hong Kong Island-Kowloon MTR interchange.
Colliers expects prime office rents in North Point and Quarry Bay to grow 4 per cent this year.
Maggie Hu, assistant professor of real estate and finance at the Chinese University of Hong Kong, said property prices can be expected to increase significantly because the tone has been set for North Point, referring to the record prices achieved for some of the new developments such as Victoria Harbour.
Quarry Bay is the second largest grade A office market on Hong Kong Island after Central, with a net floor area of 10.7 million square feet.
In 2018, the district had an annual net take-up of 1.1 million sq ft, almost 40 per cent of the city’s total net take-up.
Meanwhile, New World Development’s K11 Atelier King’s Road and 218 Electric Road from Henderson Land are set to add 500,000 sq ft of prime office space in North Point this year. And in 2022, an additional 1.7 million sq ft of office space is expected to come online.
However, the neighbourhood’s bright prospects hinge on the overall economic health of Hong Kong, which could be hit hard by the escalation of the US-China trade war.
Swiss bank Credit Suisse said the trade war could derail the recent upbeat outlook on Hong Kong real estate, predicting that all segments of the property market will see a decline in prices this year.
“For the office sector, the Eastern District has been outperforming other districts so far this year, yet the near-term future price and rental growth of the area hinge on the bigger picture of overall economic trend and market performance of Hong Kong,” said Rosanna Tang, head of research, Hong Kong and Southern China at Colliers.
