Hysan to put $250b in strategic expansion

Property | Staff reporter 20 May 2021

A joint bid has resulted in a commercial site on Caroline Hill Road being awarded to Hysan - the biggest landlord in Causeway Bay - and Chinachem for HK$19.78 billion

Ricky Lui Kon-wai, chief operating officer of Hysan, said more than HK$250 billion will be invested in the project.

He said the site will serve as a strategic extension of the group's Causeway Bay territory, with the aim being to attract middle-class Hongkongers by providing them with a quality working and living environment.

He described the site as "adjacent to home," noting the group had been paying close attention to the plot since 10 years ago, when the government proposed to relocate the Electrical and Mechanical Services Department and earmarking the site for commercial use.

"To any other developer, this site is just an independent construction project, but for Hysan, it is a strategic extension," Lui said.

The group's Lee Gardens territory will be expanded from almost four million square feet of commercial floor space to about five million sq ft, an expansion of around 27 percent.

Coupled with the construction of the covered footbridge network connecting Hysan Place with commercial buildings, it would only take seven minutes to walk from these offices to the group's new project, further completing the group's Causeway Bay empire.

He described the newly acquired land as a back garden to the bustling Lee Gardens, where people can take in a wide view of the Mid-Levels and Happy Valley as well as enjoy up to 60,000 sq ft of green space.

Lui said the group had already come up with a blueprint for the project before the tender, revealing that it would involve restaurants, children's playgrounds, and pets and lifestyle-oriented businesses across100,000 sq ft of retail floor area.

The project's total floor area is at 1.07 million sq ft. After deducting the retail area and reserving 40,000 sq ft of government land, 930,000 sq ft will be left for its grade A office building, meaning the height of the building would not exceed 30 floors, with a four-level basement and parking lot included.

Currently, the latest commercial building owned by Hysan is Lee Garden Three completed in 2018, followed by Hysan Place built in 2012.

The expected completion date for the new office building is in 2026 to 2027, when Lee Garden Three will have reached an age of 10 years and Hysan Place 15 years.

Because of that, the new project is seen as a strategic flagship as it can not only attract new occupants but also retain current Hysan tenants during the renovation and refurbishment of its older buildings.

Lui emphasized that the group's investment in this plot was not an ambitious decision but rather a rational one, as they had made all the logical calculations beforehand.

He said that based on the performance of Lee Garden Three - which currently has an average per sq ft rent of HK$60 to HK$70 with a near-zero vacancy rate - the new project would deliver even higher returns as is it newer and has better views.

The construction cost of this new landmark is expected to be HK$5,000 per sq ft, with total investment between HK$25 billion and HK$26 billion, Lui noted.

As for Hysan's partnership with Chinachem, Lui explained that it is good to partner with others so that the group may retain cash flow for other valuable investments.

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