HONG KONG, May 16 9Reuters) - Henderson Land Development
snapped up a rare commercial site in the heart of Hong
Kong's central business district on Tuesday for HK$23.3 billion
($3 billion), setting a fresh record for land sold by the
government in the city.
It outbid eight other developers including local giants
Cheung Kong Property Holdings and Sun Hung Kai
Properties to win the site in Central, where office
vacancy rates are less than 2 percent.
The price beat market estimates for between HK$14 billion
($1.8 billion) and HK$22.3 billion ($2.86 billion).
The site at Murray Road, the only plot of large-scale
commercial land tendered for sale in the district in two
decades, was widely seen as a prime site for a company
headquarters thanks to its location and gross floor area of more
than 460,000 square feet.
The site is currently a public car park squeezed between the
two major flagship skyscrapers owned by Li Ka-shing's CK
Hutchison Holdings Ltd and Cheung Kong Property
The sale comes as the availability of office space remains
tight in the financial hub and landlords are offering little
room for rental negotiations, pushing prices ever higher.
Mainland Chinese firms have doubled their presence in
Central in less than a decade, taking up 21 percent of all floor
space leased in the Central Grade A office market in early 2016,
compared to 10 percent in 2009, according to real estate
services firm JLL.
The latest result halts a winning streak by mainland Chinese
developers marking their territory in the former British colony,
where government intervention is minimum and financing costs are
Mainland Chinese firms have piled in to snatch up
high-profile office towers in Hong Kong, with property giant
China Evergrande Group splurging a record-breaking
HK$12.5 billion for a building in Wan Chai and state-owned China
Life Insurance Co Ltd buying an office tower in
Kowloon's Hung Hom district for HK$5.85 billion two years ago.
China's strengthening of capital controls late last year in
a bid to restrict funds flowing out of the country as the yuan
plummeted could be a factor behind the dampened enthusiasm for
the rare Central site, analysts said.
In 2015-2016, mainland Chinese companies gobbled up 29
percent of land sold for development in one of the world's most
expensive real estate markets, according to industry figures.
Two mainland Chinese developers also shattered the city's
record for the most expensive piece of residential land ever
sold when they jointly bought an oceanfront site on southern
Hong Kong island at HK$16.9 billion ($2.18 billion) in February.
The rental gap between the most and least expensive grade A
office buildings in Hong Kong can be as wide as HK$145 ($19) per
square foot per month, which translates into annual rental
savings of as much as HK$174 million ($22.8 million) for a
tenant moving a 100,000 square foot office outside of Central,
according to JLL.
European and U.S. financial firms, in efforts to cut costs,
reduced their presence in the greater Central area by 146,000
square foot and 28,000 square foot respectively in the
three-year period to March 2016, according to a November report
by property consultancy CBRE.
Their Chinese counterparts increased their office space in
the same district by 633,000 square foot, taking up 73 percent
of the total banking and financial sector space expansion in the
($1 = HK$7.78)
(Reporting by Venus Wu; Editing by Anne Marie Roantree and Nick