A luxury residential property belonging to the US Consulate General on Hong Kong Island was sold to Hang Lung Properties for HKD 2.566 billion (US $ 331 million).
The CBRE Group, which was assigned to sell the property, confirmed the sale price. That’s nearly half the price of neighboring land, 39 Shouson Hill, when it was sold to a Chinese developer in 2018 for HK 5.9 billion ($ 761 million).
Hang Lung Properties (101), chaired by businessman Ronnie Chan, confirmed they had won the closed auction. It’s rare to see a parcel of land in the desired neighborhood on a market, and the price is reasonable, the group said. The purchase is a vote of confidence in Hong Kong’s future, he added.
The group is investing HK 4 billion (US $ 516 million) to upgrade the property into a series of villas, which are expected to be completed by 2024.
The last time Hang Lung bought land in Hong Kong was 20 years ago, and he has rarely developed real estate in the city since then.
The project received an offer for four months. Its market value is estimated at HK 10 billion ($ 1.29 billion) and mostly around HK 6 billion ($ 774 million). In the end, it sold for HK $ 2.566 billion ($ 331 million), which is the equivalent of HK $ 54,138 ($ 6,984 million), 40% less than neighboring Shouson Hill’s 39 property, which sold for HK 80,000 ($ 10,321) per square foot. .
Charles Chan, General Manager, Professional Appraisal and Services at Savills, believes these prices are in line with market expectations as the real estate market is nowhere to be compared to two years ago. Nearly HK $ 50,000 ($ 6,451) per square foot is not a low price, he added. The developer will have to pay an additional HK $ 1 billion (USD 129 million) for land grants.
The sale of the property comes at a time where political and trade relations between the U.S and China has deteriorated gravely. Many U.S companies in Hongkong are considering moving out. A survey conducted by an American Chamber of Commerce in Hongkong has revealed that about 40% of its 153 members are considering moving out of Hongkong.