Hong Kong Parking Garage May Fetch $2.2 Billion in 2017 Sale

  • First Central commercial plot on sale since ’96, Colliers says
  • Lack of supply, low vacancy rate to drive interest in site

The Murray Road multi-story car park in Hong Kong.

Photographer: Justin Chin/Bloomberg

Hong Kong’s government has announced the first sale of commercial land in the city’s central business district in more than 20 years.

The site, currently used as a multi-story car park in Murray Road, Central, is about 31,000 square feet, according to a government statement released late yesterday. The plot is valued at HK$15.8 billion to HK$17 billion ($2.2 billion), according to Vincent Cheung, Colliers International executive director of valuation and advisory for Asia.

It is the the first commercial development site available in Central since 1996, Cheung said, and rents will set “a new indicator” for offices in Central.

The sale of the plot, situated near the Bank of China building and billionaire Li Ka-shing’s Cheung Kong Center, is slated for the first quarter of next year. It comes after some record-breaking deals in Hong Kong’s office market, driven by strong demand from Chinese companies. In July, Wheelock & Co. sold HarbourGate East Tower to Shenzhen-based company Cheung Kei Group for HK$4.5 billion. In 2015, Chinese developer China Evergrande Group and China Life Insurance Co. bought office blocks in separate transactions worth a combined HK$18.35 billion.

The sale may attract attention given the lack of new supply and low prime-office vacancy rates in the area, Bloomberg Intelligence analyst Patrick Wong wrote in an email. The potential high price may “stimulate” investment demand for office properties in Central and sale prices of existing offices in Central may rise further, he said.

Residential Market

On the residential front, the government is projected to supply 19,460 private units in the fiscal year ending March, which is 8 percent above its target. That’s the biggest supply since 2010, Paul Chan, the city’s development secretary, told reporters on Thursday.

Hong Kong’s residential property prices have risen to record highs and sales volumes have surged even after the government raised stamp duty in November, defying previous forecasts that the measures would send transactions plunging by as much as 70 percent.

Private housing prices in November reached the highest since data was first made available in 1979, the city’s rating and valuation department said Friday.

“The government will spare no effort in identifying additional suitable sites for development and closely monitor the market situation,” Chan said.

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