Hong Kong commercial property One HarbourGate East Tower in Hung Hom, among a series of assets seized last year from Chinese tycoon Chen Hongtian, has been put on sale for a second time amid weak office market sentiment.
The receivers have put the tower back on the market for a new round of bidding, according to a statement released on Thursday by international real estate firm Savills, which said it has been appointed as the sole agent for the sale.
The prime harbourfront property was valued at around HK$7 billion (US$896 million) in 2022, according to a Savills statement when it was first put on the market in May 2023.
Chen’s company, Cheung Kei Group, blamed a “short-term cash-flow disruption” for losing control of three properties, which also included a 9,200 sq ft house on The Peak that he bought for HK$2.1 billion in 2016.
The One HarbourGate building, bought for HK$4.5 billion in 2016, has about 279,000 sq ft of commercial space. Completed in 2016 by Wheelock Properties, it comprises an office tower and a two-storey retail space along the waterfront, with 155 car-parking spaces. It serves as the headquarters for Sun Life Hong Kong.
The unit price will be between HK$10,500 and HK$12,000 per square foot, according to Vincent Cheung, managing director of Vincorn Consulting and Appraisal.
The deadline for offers is noon on August 20.
“As we venture into the latter half of 2024, the commercial property market has undergone a period of adjustment, moving away from its previous peaks and marked by several substantial transactions,” said Raymond Wan, chief senior director of investment at Savills.
“This shift in market dynamics has cultivated an environment where buyers are primarily focused on acquiring high-quality assets, viewing the current climate as an opportune moment to secure these highly coveted properties.”
More office buildings are expected to come up for sale as financial institutions are more cautious about financing commercial assets, Cheung said.
“In case the owner cannot get the recurring loans from the financial institutions, the assets would be foreclosed by the receiver for sale,” he said.
High vacancy rates and high pressure on commercial rentals are also putting cash flow pressure on commercial asset owners, he added.
“In the real estate landscape of 2024, distressed properties have taken centre stage, with numerous transactions being executed at remarkably enticing prices,” said Godfrey Cheng, deputy senior director of investment at the CEO office of Savills.