Record $6.31b milestone

Henderson Land Development and Swire Properties achieved a historic milestone by securing a series of old buildings in Quarry Bay through a compulsory sale at a record-breaking reserve price of HK$6.31 billion.

The buildings are situated between 983 to 987A King's Road and between 16 to 94 Pan Hoi Street, in close proximity to Two Taikoo Place. The collection of buildings includes 16 old structures such as the Swiss House, with heights varying between 8 and 11 stories.

The compulsory sale transaction has set a new record, surpassing the previous one achieved by New World Development (0017) with their redevelopment project of the old State Theatre Building in North Point, which was recorded at HK$4.8 billion at the end of 2020.

Henderson Land said the project will be a collaborative effort between them and Swire Properties, with Swire Properties knowledgeable about the location.

Augustine Wong Ho-ming, an executive director at Henderson Land, noted that the court-set reserve price was calculated using past transaction figures, which were deemed out of touch with current market dynamics.

Given the group's substantial 90 percent ownership share in the old buildings, they decided to move forward with their original plan to acquire the site. Wong emphasized that the price does not truly reflect the actual cost.

The developer still has other projects in the pipeline for compulsory auctions, but acquiring old buildings in a high-interest rate environment is challenging, Wong said. He added that the pace of old building redevelopment will likely slow down.

The recent transaction price for a nearby housing estate, Taikoo Shing, stands at approximately HK$16,000 per square foot. JLL has noted that due to the limited supply of homes in the area, this project could potentially capitalize on future increases in real estate pricing.

Cynthia Li, JLL's senior director of Hong Kong Capital Markets, highlighted that Quarry Bay's popularity has surged due to decentralization trends from core commercial zones, promising strong potential for capital appreciation and rental income growth.

Due to its excellent location near Quarry Bay and Tai Koo MTR stations in a mature commercial area, the developer believes there will be demand for both small and large residential units and will conduct a detailed study.

The project is expected to offer a total floor area of up to 440,000 sq ft, with construction anticipated to commence in mid-2024 and completion aimed at 2029.

The redevelopment project has received approval from the Buildings Department to construct two 28-story mixed-use towers. The residential portion will encompass about 368,300 sq ft of floor space, while the commercial portion will cover about 72,300 sq ft.

The developers had initially applied to the Town Planning Board for a purely commercial development scheme but faced rejection.