Hong Kong Office Units Sell For Steep Discounts
HONG KONG – Several office units in Central have recently changed hands at significant discounts, reported Mingtiandi on Tuesday (19 July, SGT).
For instance, a strata office unit at level 14 of the 9 Queen’s Road Central office building were sold in June for HK$95 million ($12.1 million), which translates to HK$28,875 (US$3,678) psf for the 3,290 sq ft commercial property.
The selling price represents a large drop for office space in the building completed in 1991 by Hongkong Land, where a high zone office floor was divested at record local price of HK$60,000 psf in 2018. During the same year, a mid-level office floor there was also divested for HK$43,662 psf. This means the seller in the most recent transaction suffered a 34 percent markdown from prices seen four years ago.
Apart from being a mere 1.5 percent markup from the HK$93.6 million paid by the seller to acquire the property nine years ago, it is also 15.2 percent lower than the vendor’s asking price of HK$112 million.
The seller is troubled mainland developer Jiayuan International Group, which had used the office unit as its headquarters. The buyer is Gradual Development Ltd, a company controlled by Matthew Cheung, who is the scion of the family controlling Cheung & Sons conglomerate, a Hong Kong-based property investor and manufacturer of construction materials.
“I would say the transacted price was not surprising because we have been aware of and have recorded big price drops in a few Grade A office deals in the past two years,” commented Peter Ho, Head of commercial sales for Hong Kong at Knight Frank.
“The 9 Queen’s Road Central transaction aligns with the percentage of those price dips and tells us that the office sales market is still very weak and that purchase demand is running at a very low level.”
The deal also showed other symptoms of a distressed sale, as Jiayuan used the commercial property as collateral for a loan taken out in March 2022, in which Matthew Cheung reportedly lent an unknown amount.
Furthermore, Knight Frank’s Ho revealed that there were other office spaces in Central that were sold at a discount recently. For instance, the Hong Kong branch of the American Chamber of Commerce (AmCham) disposed its offices in the Bank of America Tower at a 20 percent discount to its asking price in late-2020.
