Hong Kong Property Shakes Up Market: 152 Queen's Road Central Sold for $140 Million!

In a surprising turn of events in Hong Kong’s real estate market, a commercial tower has been sold for HK$1.1 billion ($140 million) in what insiders are labeling a distressed sale. This tower, located at 152 Queen's Road Central in the heart of the Central district, commands attention not only for its price point but also for the broader trends it represents in the industry.

The 28-story building, with a gross floor area of approximately 60,450 square feet (5,616 square meters), fetched a remarkable price of HK$18,197 per square foot. The nearly fully leased tower generates a monthly rental income of HK$3.3 million, providing an initial yield of around 3.6 percent—a figure that would typically appeal to institutional investors looking for steady returns.

This unique property was sold by a partnership including local investor Lo Wah, affectionately known in the market as “Uncle Wah,” along with a Hong Kong lawyer named Chung. They were the driving force behind the development of this modern building, constructed in 2020, which is strategically located near the popular Central/Mid-Levels escalator.

The buyer, an institutional investor from Southeast Asia, acquired the property following a triggered sale by DBS Bank, as the previous owners faced significant financial distress. Sources close to the deal expressed astonishment at the “extremely good price” achieved, especially considering the building drew offers in the neighborhood of HK$900 million from other bidders. Sale agents Colliers and CBRE had initially estimated the property's value at HK$1.4 billion during a public tender last August.

Location and Design Advantages

Strategically positioned just a three-minute walk from Sheung Wan MTR station, 152 Queen's Road Central boasts dual entrances along Queen's Road and Wellington Street. The building's layout features retail and dining spaces from the ground floor up to the 15th floor, while office spaces occupy levels 17 through 30. Each office floor consists of only one unit, with sizes ranging between 2,531 and 3,733 square feet.

This sale comes at a time of diminished activity in Hong Kong's office market. Recent reports indicate that the capital values of Grade A offices in Hong Kong saw a staggering drop of 41.6 percent from their 2019 highs, with ongoing uncertainties casting shadows on future transactions.

In related news, Hong Kong Metropolitan University recently acquired an office building in Kowloon at an astonishing 62 percent discount from its previous 2022 valuation, further highlighting the current climate of distressed assets in the region. Meanwhile, the auction of another commercial building in Kowloon has been postponed, signaling ongoing volatility.

As we look ahead to 2024, with major consultancy firms projecting continued downward trends in both transaction volumes and rental prices for Grade A offices, savvy investors should keep a keen eye on emerging opportunities in these challenging times. Will 152 Queen's Road Central mark the beginning of a resurgence in distressed property sales? Only time will tell!