Mar 20, 2023
Hong Kong Developer Opens New Office Towers Amid Record Vacancy
(Bloomberg) -- A Hong Kong property developer is bringing new commercial buildings to the market even as the competition for tenants intensifies amid record-high vacancies.
Sino Land Co., controlled by tycoon Robert Ng, has a pair of commercial buildings opening in Hong Kong’s non-core areas to capture demand for cheaper office space outside traditional districts like Central. One of them is Landmark South in Wong Chuk Hang, a former industrial area that’s a 15-minute drive from Central.
“A lot of private wealth-management companies are very interested in this place,” said Bella Chhoa, a director at Sino Land managing offices and shopping malls, adding that many of the people working for these companies also live near the area.
While the finance companies have front-line staff in Central or Wan Chai areas, they still need a back office, “so that’s another advantage that we have,” Chhoa added.
An additional appeal is rental prices, which are about 70% or half of the rates in Central, according to the firm.
Sino Land’s shares rose as much as 4.7% on Tuesday morning.
Hong Kong had a record high 13 million square feet of empty premium office space in February, with more supply coming from new buildings in Central and other main commercial areas. As a result, Hong Kong landlords are increasingly fighting for tenants, particularly as banks trim costs and cut jobs.
BNP Paribas SA is moving the majority of its Hong Kong staff from offices in Central to Quarry Bay, a business hub on the east side of Hong Kong Island, as the lender looks to shed costs, Bloomberg News reported earlier this month.
Landmark South, co-developed with Empire Group, has also lured tenants from the art sector. The tower has signed up three galleries, including Tang Contemporary Art. The Hong Kong Arts Development Council will move in soon. The galleries account for 20% of the area leased, and the building has a gondola with a 600-kilogram (1,323-pound) load capacity to facilitate artwork delivery.
The tower has an occupancy of about 38%, and the company expects it to reach 50% in the first half of this year. The property was completed in July.
The growth of Wong Chuk Hang as an arts hub, which started a decade ago, has accelerated in recent years due to the government’s 2020 plan to revitalize the area, said Chhoa. In recent years, several well-known art galleries such as Rossi & Rossi and Ben Brown Fine Arts have relocated to the district.
Sino is also marketing a commercial project named One North in Yuen Long. It’s set to be one of the first large-scale high-end developments inside the so-called Northern Metropolis, a government-led district bordering Shenzhen.
Some of the property’s target tenants include logistics and construction companies that have facilities nearby. Its projected occupancy rate has reached double digits based on commitments, the company said.
Sino is seeing recovery in retail. The landlord’s shopping centers are seeing sales recover to about 70% to 80% of pre-pandemic levels. The developer expects business to continue to improve as visitors return.
“I trust the dark ages are over,” said Chhoa. “There has been a gradual picking up of business.”
--With assistance from John Cheng.
(Updates with Sino Land share price changes in sixth paragraph)
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