Lofter and SC Capital have sewn up the final bits of their Ap Lei Chau prize
Hong Kong’s Lofter Group on Wednesday acquired full ownership of a redevelopment site on Ap Lei Chau Island at a compulsory auction, with the value-add specialist now poised to transform the set of ageing buildings into a residential and retail project in collaboration with Singapore-based SC Capital Partners.
Lofter won the five-storey blocks at 2-4A Ping Lan Street and 26-28 Ho King Street at the reserve price of HK$157 million ($20 million) after acquiring more than 90 percent of the existing structures last year.
Alvin Leung, director of investment management at Lofter, credited the Hong Kong government for cutting red tape and enabling the process to conclude just nine months after the developer applied for the compulsory sale.
“The group welcomes the government’s recent proposal to lower the compulsory sale threshold and further simplify the procedure, which helps address the ageing building issue and speed up urban redevelopment,” Leung said in a release. “It also brings more opportunities for the group to acquire and redevelop ageing buildings in urban areas.”
Harbourfront Park Space
Lofter and SC Capital plan to redevelop the harbourfront site into a 35,000 square foot (3,251 square metre) residential complex atop a retail podium. The site is surrounded by more than 580,000 square feet of park space, according to Lofter founder and chairwoman Carol Chow, and is located within a three-minute walk of Lei Tung MTR station.
Alvin Leung and the Lofter team emerged triumphant at the public auction
The partners estimated last year that the total acquisition price for the Ap Lei Chau project could reach more than HK$418 million, with Lofter indicating that the project should be completed in 2025.
“The successful acquisition of this project marks the steady development and continuous growth of Lofter in Hong Kong’s real estate market, providing more best-in-class housing options for Hong Kong citizens and making a positive contribution to the city’s development,” Chow said.
With the launch of the government’s Invigorating Island South initiative, the area surrounding the project is gradually becoming a better place to work, live and play, according to Cynthia Li, senior director of project strategy and consultancy at JLL, which conducted the public auction.
“We believe that properties in the Southern District, particularly in Ap Lei Chau, will continue to hold investment value given the scarcity of land in the area and the continued appetite for residential land,” Li said Wednesday in a release. “This was a rare opportunity for the developer to invest in the area.”
Pipeline Moves Ahead
The Ap Lei Chau development adds an eighth project to Lofter’s pipeline in Hong Kong, with the company seeing the current downturn as an opportunity to pick up properties that might not have become available under more favourable conditions.
Lofter’s other significant addition to its pipeline in 2022 was revealed last May, when the developer announced that it had teamed up with BentallGreenOak and Schroders Capital to take on a commercial project in the Tsim Sha Tsui area.
Lofter and its global partners indicated at the time that they were paying more than HK$1.5 billion to acquire a set of properties at 31-37 Hankow Road for the Kowloon project.
For SC Capital, the Ap Lei Chau redevelopment aligns with the Singapore firm’s opportunistic fund series, Real Estate Capital Asia Partners (RECAP), which focuses on value creation through refurbishing, repositioning and operating real estate assets across Asia Pacific. The company declined to comment on Wednesday’s successful auction.
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