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HONG KONG – The U.S. government sold one of its largest properties in Hong Kong for 2.57 billion Hong Kong dollars ($ 331.6 million) to developer Hang Lung Properties, led by pro-Beijing billionaire Ronnie Chan, a advocate of collaboration between the US and China, amid deteriorating relations between the two countries.
The luxury residential site, located at 37 Shouson Hill Road in an exclusive area of southern Hong Kong Island, comprises six apartment buildings with a combined space of 95,000 square feet overlooking Deep Water Bay. The property is currently used as accommodation for the staff of the United States Consulate General.
In an emailed statement, a Hang Lung Properties spokesperson said the purchase “is a vote of confidence in Hong Kong’s future,” adding that the company will invest approximately HK $ 4 billion to rebuild the site in luxury single-family houses, scheduled for completion in 2024..
The sale price, which translates to HK $ 54,138 per square foot, represents a 38% discount from a previous deal in which an adjacent property was purchased by state-owned conglomerate China Resources in July 2018 for HK $ 5.9 billion. , or HK $ 86,800 per square meter. .foot.
“Hang Lung is pleased to have won the contest to [the] Shouson Hill land, “said the spokesman.” The price of this exceptional and premium piece of land is reasonable. “
Billionaire Ronnie Chan, chairman of Hang Lung Properties, had said for years that the time was not right to invest in property in Hong Kong. © Getty Images
The property was put on the market in May, when Beijing first announced plans to impose a comprehensive national security law in Hong Kong. The US government subsequently revoked the special trade and investment privileges granted to Hong Kong, raising concerns about the city’s status as a global financial center.
The US government bought the property for an unknown price in 1948, when Hong Kong was still a British colony, according to Land Registry records.
A spokesman for the US Consulate General said the sale is part of a global reinvestment program, through which the US government “regularly reviews” its portfolio of properties abroad. The consulate received multiple offers, the spokesperson said, adding that the deal is expected to close on December 31, 2020.
“The US government will reinvest part of the proceeds from the sale in multiple US government-owned properties in Hong Kong,” the spokesman said. “This sale is purely a business decision … as part of an overall review of all holdings. It will not affect our presence, staff or operations in any way.”
Andy Wong, senior director at CBRE Hong Kong, the agency handling the sale, said the price was in line with market expectations despite volatile economic conditions.
“The high-quality project has received great interest from local and international investors … underscoring investors’ confidence in the Hong Kong real estate market in the long term,” Wong said in a press release.
However, major developers in Hong Kong and mainland China, including Sun Hung Kai Properties, New World Development, Henderson Land Development, Wheelock and Swire Properties, walked away from the deal, according to the South China Morning Post. However, Hong Kong mogul Li Ka-shing’s CK Asset Holdings submitted an offer.
“All Chinese companies in Hong Kong boycotted the sale because they don’t want to benefit Americans,” said a Hong Kong real estate analyst, speaking on condition of anonymity. “As a result, some firms, especially those closely associated with mainland China, want to steer clear of the deal to avoid political complications.”
According to people familiar with the tender, the U.S. Consulate General conducted strict due diligence on the bidders’ backgrounds and examined construction plans for the remodel project, which put off some potential buyers.
“The price reflects a moderately positive view of the buyer on the market outlook and the potential of the site … broadly in line with current market transactions,” said Nelson Wong, JLL’s head of research in China.
Still, Wong noted that the uptake rate for luxury residential units in Hong Kong has been slow, resulting in a persistent increase in ultra-luxury residence vacancies, which reached 13.8% at the end of 2019.
The Shouson Hill site is the city’s first property in years to be purchased by Chan’s company. In the company’s earnings presentations in recent years, he repeatedly said that it was not the right time to invest in property in Hong Kong. Instead, Hang Lung Properties has been active in the mainland market.
The 71-year-old billionaire is also the chairman of the Asia Society board of directors in Hong Kong and is known for being outspoken on political and China-related matters.
Chan is perhaps best known in the United States for serving on the board of directors of the collapsed energy company Enron. In 2014, his family donated $ 350 million and $ 20 million, respectively, to Harvard University and the University of Southern California.
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