Henderson Land Bags 3rd of 4 Sites for Kowloon Project With $150M Buy

Henderson Land Development secured the third of four adjoining sites for a Hong Kong residential project with Tuesday’s HK$1.2 billion ($150 million) compulsory sale of an ageing building in Kowloon’s To Kwa Wan neighbourhood.

The acquisition of the 12,290 square foot (1,142 square metre) site spanning 68A to 70C To Kwa Wan Road gives Henderson all but one of the plots it needs to consolidate a 42,506 square foot development parcel for a project with 374,355 square feet of gross floor area.

After having acquired the two adjoining sites through earlier forced auctions, Henderson has been actively buying up space in a fourth building that it needs to consolidate the project in the area just south of Kai Tak in Kowloon City.

“The application of compulsory sale of the remaining site (about 10,000 square feet) is in progress,” Henderson Land executive director Augustine Wong said in a release. The fourth plot will be considered for redevelopment together with the others or may be developed separately, depending on the company’s success in obtaining a sale order, Wong said.

Consolidation Advances

The property at 68A-70C To Kwa Wan Road comprises a nine-storey commercial-residential building completed in 1960. The site is on the northwestern side of To Kwa Wan Road between its junction with Chi Kiang Street and Lok Shan Road, about six minutes’ walk from To Kwa Wan MTR station, which opened for service in June of last year.

Excluding its adjoining plots, the site on its own can yield up to 104,465 square feet of floor area, which translates to HK$11,487 per square foot of gross floor area at the HK$1.2 billion reserve price. Henderson’s winning bid at Tuesday’s auction, which was conducted by Savills and gave the company the remaining units it had not yet acquired in the structure, added about HK$13.4 million to the developer’s total expenditures in consolidating the building.

Henderson is seeking to merge 68A-70C To Kwa Wan Road with an adjacent building it acquired in March spanning 14-16 Ha Heung Road, 1-7 Lai Wa Street and 2-8 Mei Wa Street and another connecting property it purchased last November at 58-70 Lok Shan Road, 1-9 Mei Wa Street and 18-20 Ha Heung Road. The remaining segment is at 72-76 Lok Shan Road and 72-76B To Kwa Wan Road.

Last October, Henderson won approval from the Buildings Department for a redevelopment scheme for the consolidated To Kwa Wan site, which provides for construction of a 27-storey residential building atop a three-storey retail podium once the company gains full ownership of all four properties.

Should each flat in Henderson’s proposed project average 400 to 500 square feet of saleable area upon completion, the price for each unit could run from HK$11 million to HK$13 million, according to Cyrus Fong, senior director for valuation and advisory at Knight Frank.

Bleak Backdrop

Henderson’s latest milestone comes after Cushman & Wakefield reported last week that residential transactions in Hong Kong fell by 22 percent in the third quarter compared with the preceding three months for a total of 11,600 deals.

Charles Chan, managing director of Savills Valuation and Professional Services in Hong Kong, linked the ailing market to interest rate hikes, rising construction costs, the US-China conflict and COVID-19.

“The resumption of quarantine-free travel may not directly impact developers’ acquisition projects, as the number of compulsory sale applications is mainly related to the direction of the property market,” Chan said in the release announcing Henderson’s successful bid.

In addition to Henderson’s acquisitions through compulsory sales, in September of last year the builder won a residential project along Ma Tau Wai Road for HK$8.1 billion through a tender held by the Urban Renewal Authority. The project, which sits between Bailey and Wing Kwong streets, is located just a few minutes’ walk from 68A to 70C To Kwa Wan Road in the area where To Kwa Wan borders Hung Hom to the south.

In February of this year, Hong Kong-listed Hysan Development and privately held Empire Group agreed to acquire respective 25 percent stakes in the Bailey Street/Wing Kwong Street project for a combined HK$6.1 billion ($780 million) in capital commitments.