Kai Tak Project’s Commercial Component Sold For US$433m
HONG KONG – Far East Consortium has struck a deal to dispose the office and retail component of a development on the former Kai Tak airstrip for HK$3.38 billion (US$433.3 million), reported Mingtiandi on Tuesday evening (7 December, SGT).
As such, the Hong Kong-based property player will now be building the project on behalf of its new owner, China Light and Power (CLP), a power provider. Under the terms of the transaction, CLP will be buying the project’s office tower upon completion, with the developer stating that it plans to tap the proceeds of the sale to finance construction of the 178,915.5 sq ft office building.
The project’s 400-room hotel adjacent to the Kai Tak Sports Park will still be owned by FEC and is expected to be completed by 2024, the same year the sports facility’s opening.
CLP will be involved in the design and construction of the commercial component. It also expects to transfer its headquarters there upon completion. If the project is built up to its maximum floor area, the power provider will be paying HK$18,891 psf for its new headquarters.
Previously, FEC had bought the 121,374 sq ft site for HK$2.45 billion in 2019, with that price dipping by about 9 percent below the low end of market expectations. At the time, market watchers told Mingtiandi that bidders had been “more conservative” in their offers for the commercial site that is near both the Sung Wong Toi and Kai Tak MTR stations because of title restrictions like prohibition of strata sales.
In explaining the reason for divesting the smallest commercial plot on the former Kai Tak airstrip, FEC stated that the sale would, “(i) realise the value of the Land and the Development, (ii) allow the gain from the Disposal to be crystallised and the capital to be recycled, and (iii) increase liquidity and reduce net gearing.”
FEC is disposing the project’s commercial component even though average Grade A office rents across Hong Kong inched up by 0.2 percent month-on-month in October, marking the first growth since office rents peaked in May 2019, based on JLL data.
