King's ransom as grit pays off for Tang familyProperty | Staff reporter 29 Jul 2021
The family of the late Tang Shing-bor sold the first phase of East Asia Industrial Building to a mainland company for HK$2.24 billion, the biggest commercial property transaction so far this year.
The property, sitting at No 2 at Ho Tin Street in Tuen Mun, is only a three-minute walk to the Tuen Mun station. The 15-story building covers an area of around 466,449 square feet, suggesting a per-sq-ft price of HK$4,802.
Last month, the family sold a commercial building, No 57 Ta Chuen Ping Street in Kwai Chung, for HK$900 million, bringing a paper loss of nearly HK$200 million after having acquired it for HK$1.1 billion in 2019.
The family of the late Tang - famously known as the "Shop King" - has sold the East Asia building, wihich currently has a tenant, to China Resources Logistics, according to a local property broker.
The current lease was reportedly signed three years ago, and the rental price per sq ft is about HK$12, suggesting a monthly lease of HK$5.6 million. The rent is expected to go up in the future.
The family first acquired a 71 percent stake in the building for HK$508 million in 2012, before further purchasing another 18 percent for HK$238 million in 2016. It finally brought the rest in 2018, marking a total investment of around HK$900 million.
Excluding fees, the family enjoyed a paper gain of over HK$1.3 billion, or 1.44 times, after holding on to the property for less than 10 years.
This came as Hong Kong rental prices rose for a fourth consecutive month in June but home prices remain flat, with analysts expecting rents to continue to be under pressure as unemployment remains high.
The private domestic rental index rose for a fourth month, up 0.06 percent month on month but down 1.2 percent year on year. For the first half, the rental index rose 0.7 percent from a year earlier.
Rents are fully linked to the economy and the jobless rate, said Knight Frank executive director Thomas Lam, adding that recent growth in rents was fueled by the SAR's economic recovery and a falling jobless rate.
However, rents are expected to drop this year due to a relatively high jobless rate in Hong Kong, Lam said, suggesting a low rental yield for the year.
In comparison, average home prices were flat this month, ending a five-month rise.
The private domestic price index stayed at 394.5, the same as in May. For the first half, the official home price index grew by 3.84 percent from a year ago.
Lam said that some of the purchasing power has been digested as local buyers have been rushing to buy flats since August before the secondary market recorded around 6,000 deals in April and May each.
To that end, he expects local prices to grow steadily and rise above the record in the third quarter, as developers are rushing to launch sales.