Sale price of 25-story office building in Sheung Wan cut by a third

Bloomberg and staff reporter

An office building majority held by Goldman Sachs Group has cut its asking price by at least one-third to about HK$900 million, underscoring the depth of the downturn in the property market.

The 25-story 88WL office building in Sheung Wan is finding it difficult to attract buyers, sources said, despite sellers earlier this year expecting to fetch HK$1.3 billion for the property.

KaiLong Group - a Shanghai-based real estate fund manager and an investor in the building - is said to be conducting the sale. It is unclear whether Goldman holds the office stake on its own balance sheet or on behalf of clients.

The discount underscores the headwinds in the commercial real estate market, dampened by high vacancy rates and expensive borrowing costs. A fresh supply of office towers in the coming years is causing an oversupply, putting pressure on older buildings in non-core locations.

With interest rates now higher than rental yields, few buyers are interested in such commercial assets. Office prices are down 20 percent from their peak in 2018, according to the government.

However, Chinese billionaires such as ByteDance's co-founder Zhang Yiming are expanding their businesses in the city. Zhang has leased space in one of Hong Kong's most recognizable skyscrapers for his five-month-old venture capital firm.

Cool River Venture HK, an investment company Zhang established in May, has taken two suites on the 21st floor of Two International Finance Centre in Central, according to a filing with Hong Kong's Land Registry. The fund will share the floor with CTBC Bank - a Taiwan lender.

Zhang is among China's best-known entrepreneurs, founding the social media company that first popularized artificial intelligence-driven news services before creating the global phenomenon known as TikTok. He quit his corporate roles around the time Beijing began cracking down on alleged excesses by tech firms.

Cool River itself is regarded as an indicator of Zhang's future intentions, given he has largely stayed out of the limelight since stepping back in 2021.

Earlier this year, ByteDance rented out a 20,000-square-foot space in the adjacent International Finance Centre. It previously set up a temporary base in a coworking space to house dozens of employees in legal and finance.

Separately, a basket of residential properties covering an area of 7,383 sq ft at 459 Hennessy Road in Causeway Bay has been put up for HK$90 million.