Hysan Says Causeway Bay Rents to Narrow Price Gap With Hong Kong’s Central
Hysan Says Causeway Bay Rents to Narrow With HK’s Central
Thomas Lee/Bloomberg
Rents in Causeway Bay, the world’s second-most expensive retail area, may increase as Hong Kong’s economy may expand by 4 percent to 5 percent this year, based on the government’s forecast in February.
Rents in Causeway Bay, the world’s second-most expensive retail area, may increase as Hong Kong’s economy may expand by 4 percent to 5 percent this year, based on the government’s forecast in February. Photographer: Thomas Lee/Bloomberg
Hysan Development Co. Ceo Gerry Yim
Jerome Favre/Bloomberg
Gerry Yim, chief executive officer of Hysan Development Co.
Gerry Yim, chief executive officer of Hysan Development Co. Photographer: Jerome Favre/Bloomberg
Hysan Development Co., the biggest commercial landlord in Hong Kong’s Causeway Bay, expects office rents in the area will rise to narrow the gap with the city’s Central business district.
Central’s top-tier buildings such as the International Finance Centre are raising rents as banks and hedge funds expand, prompting a shift to lower-priced areas including Causeway Bay. Monthly prime office rents in Central, the world’s most expensive by occupancy cost, surged 39 percent from a year earlier to about HK$179 ($23) a square foot in March. While they jumped 64 percent in Causeway Bay, rents there are still lower at HK$60, according to Knight Frank LLP.
“There’s still room for us to narrow that gap,” Hysan’s Chief Executive Officer Gerry Yim said in an April 15 interview in Hong Kong. “While I don’t think it’s realistic to expect us to catch up with Central in the near term, for many firms which don’t necessarily have to stay there, Causeway Bay offers a very attractive option.”
Causeway Bay, the world’s second-most expensive retail area with shopping malls including Wharf Holdings Ltd. (4)’s Times Square and Hysan’s Lee Gardens, is about a seven-minute subway ride from Central. Rents may also increase as Hong Kong’s economy, which grew 6.8 percent in 2010, may expand by 4 percent to 5 percent this year, based on the government’s forecast in February.
Further Rent Increases
“If external economic factors stay strong, we’re seeing at least another five to six years in the current upward cycle for office rental in Hong Kong,” said Yim, 51, who took over as Hysan’s chief executive officer in March last year.
Some higher floors of Hysan’s prime office buildings in the area, including the Lee Gardens, charge as high as HK$60 a square foot, Yim said. Asking rents for Hysan Place, the 40- storey, 710,000-square-foot commercial complex the company aims to complete next year, are as much as HK$68 per square foot, Yim said.
Hysan, which owns about 2.1 million square feet of office space in the area, in 2010 derived 43 percent of its gross profit from office rental and 41 percent from its 900,000 square feet of retail space, according to its annual report.
Prime retail rents in the area rose 34 percent last year on the continual influx of mainland Chinese tourists, according to Savills Plc. Russell Street, where Times Square is located, was the second-costliest retail strip in the world after New York’s Fifth Avenue, Colliers International Ltd. said in December.
Hysan’s office tenants include Yahoo Inc. and Sun Hung Kai Financial Ltd., Hong Kong’s biggest stock brokerage.
Hysan was founded by Hysan Lee in 1923. Lee, who was born in Hawaii and educated in the U.S., took over his father’s opium trade business and started Hysan after buying properties in the west of Causeway Bay from Jardine Matheson & Co., one of Hong Kong’s then biggest trading houses. Lee was assassinated in 1928.
Former chairman Peter Lee, Hysan Lee’s grandson, died in 2009. Irene Lee, Peter’s cousin, will take over in May from Sir David Akers-Jones.
To contact the reporter for this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net
Rate this Page