A sudden surge appeared in the sluggish local commercial buildings market last month as four big-ticket transactions were recorded amid prices dropping lower than the previous year.
The largest deal is the disposal of the en-bloc Goldin Financial Global Centre in Kowloon East.
The 31-floor, 920-thousand-square-foot building was reportedly sold at HK$6.9 billion - HK$7,500 per square foot - 30 percent lower than the selling price of other grade-A buildings in the Kowloon area. Its ex-holder, Goldin Financial (0530), has reportedly faced financial difficulties in recent years.
The second largest deal is the disposal of Ares SSG Capital Management's purchase of a 51 percent stake in New World's (0017) Wing Hong Street office development project in Cheung Sha Wan for HK$3.08 billion.
The two companies are to establish a joint venture to develop the commercial complex for sale purposes, according to New World's announcement.
The local commercial buildings market has been weakening this year. There have been only 15 transactions recorded, valued at HK$13.5 billion in sum, which is fewer than the 23 deals valuing HK$17.3 billion last year.
The majority of this year's transactions were made last month, with four deals accumulating about HK$11.7 billion, making up 87 percent of the market.
Francis Law Sau-fai, the executive director of Toyo Mall, sold Luen Shing Building, located at 118-120 Queen's Road Central, at HK$298 million - HK$27,800 per square foot. William Doo, the grandson of New World founder Cheng Yu-tung, was reported to be the buyer.
The building, which Law purchased at HK$30.39 million in July 2002, has multiplied over eight times in value after 20 years.
In addition, CIFI Holdings (0884) sold 60 percent of its stake in a commercial building - which features 12,500 square feet of aggregate land area and located at No 101 and 111 King's Road - for HK$1.34 billion to Wang On Properties (1243) and Dutch fund manager APG.
Stanley Poon, the managing director of Centaline Property, said that the pandemic dragged the sluggish commercial buildings market, and price-cutting properties mainly drove big-ticket transactions in the last month.
The sale of Goldin Financial Global Centre undoubtedly gave the commercial buildings market a big blow, Poon said, as its selling price was well below other properties in the same area that sell for tens of thousands of Hong Kong dollars per square foot.
Luen Shing Building, a "Ginza-style" commercial building that houses shops on higher floors, was also sold at a relatively low price, amid the pandemic.
The trading of grade-A buildings in decentralized areas remains slow as its customers purchase them as an investment, Poon said, pointing out that the four big-ticket transactions would not set a trend in the commercial buildings market.
He added that the vacancy rate in Central is as high as 9 to 10 percent, and has reached over 10 million square feet.
This is projected to reach a new record of over 20 million square feet next year, which would discourage the investors.
