Rental and traffic fears as boom hits Kowloon East

Money Glitz | Gary Poon 18 Apr 2019

The planning department has found that more commercial organizations are setting up shop in Kowloon East, with rents continuing to surge since the government launched its energizing Kowloon East plan in the 2012 policy address.

The scheme aimed to transform the area - comprising the site of the former airport as well as the Kwun Tong and Kowloon Bay business areas - from a manufacturing hub to the SAR's next central business district.

Judging by the department's Kowloon East 2018 report, the plan has bore fruit, as the proportion of businesses located in office buildings doubled from 11 percent in 2011 to 22 percent last year.

The research also noted that firms in banking and financial services, insurance, real estate, and business services soared from 6 percent of total offices in 2011 to 19 percent.

CitiBank and Manulife Financial bought the east and west towers of One Bay East in Ngau Tau Kok for HK$5.43 billion and HK$4.5 billion in 2014 - the highest price for an office building at the time.

Separately, the trade and industry department shifted its offices to Kai Tak from Mong Kok in 2015.

Meanwhile, Link REIT (0823) and Nan Fung Development's joint venture, The Quayside in Kwun Tong, with nearly 900,000 sq ft of space, is expected to open this year, with JPMorgan leasing at least four floors in the building.

In 2017, Nan Fung also bought a plot in Kai Tak area 1F site 2, with a maximum gross floor area of some 1.9 million sq ft, for HK$24.6 billion - the highest priced commercial land in Hong Kong.

The government is inviting tenders for Kai Tak area 4C site 4, with bids closing May 10 for the commercial plot.

Strong demand is continuing to drive office rents up in Kowloon East. The Planning Department has found that small units rented for between HK$5,000 and HK$10,000 monthly fell from 25 percent of total offices in the district in 2011 to 16 percent in 2018.

Colliers Hong Kong predicted the development of Kowloon East property market will grow rapidly after the completion of four major rail projects and four highways.

"The coming completion of MTR's Shatin to Central Link phase 1 in 2021 will make greater Sha Tin and Ma On Shan more accessible to Kowloon City, Kwun Tong and Wong Tai Sin as Sha Tin district contains approximately a tenth of Hong Kong's population," Colliers said in a report.

"The Shatin to Central Link phase 2 will also more readily connect these neighborhoods to MTR serviced areas in Hong Kong Island."

Colliers added that the completion of route 6 and trunk road T2 within the next six years will greatly enhance connections between Yau Ma Tei, Kwun Tong, Kowloon City and Wong Tai Sin to Tseung Kwan O, LOHAS Park, Tiu Keng Leng and Lam Tin.

This will effectively open up several new suburban business commuting destinations for the new central business district.

However, Kwun Tong council chairman Bunny Chan Chung-bun fears the district's traffic infrastructure won't be able to handle high passenger flow after many new office buildings and residential properties are completed.

Chan urged police to combat illegal parking, and the MTR Corp and bus companies to increase bus and train frequencies.

gary.poon@singtaonewscorp.com

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