Hong Kong's Kwok family will invest HK$9.4 billion (US$1.2 billion) for a 25 per cent stake in office towers to come up on a plot of land won by Sun Hung Kai Properties last month. The family is the company's controlling shareholder and its investment is being viewed as a show of confidence in the city's economy.
Hong Kong's economy entered a technical recession in the third quarter amid anti-government protests that started in June and have since derailed its tourism, aviation as well as property sectors.
Sun Hung Kai Properties, Hong Kong's biggest developer by market value, won the plot on Austin Road atop the West Kowloon High Speed Rail Station " the biggest plot ever sold in the city " for a record HK$42.23 billion in November. It said on Monday that the Kwok family's investment exhibited the family's belief in Hong Kong's prospects.
It said it "expects to bring in proper long-term investors to add value to the landmark project by taking advantage of all the resources and strength [available with] the new shareholders," Raymond Kwok Ping-luen, the company's chairman, said in a statement.
The project will include both retail and office portions, and SHKP will "form a synergy" with the International Commerce Centre it operates nearby, Kwok said last month after winning the bid.
The plot has an area that equals 47 Olympic size swimming pools. It can be built into 3.17 million sq ft of gross floor area for retail, office and hotel use, which will make it 12 per cent larger than the ICC, Kowloon's tallest skyscraper.
The Kwoks will share the benefits of ownership, development as well as the operation of only the office towers to be built on the land.
Patrick Mak, an executive director with Knight Frank, who is also head of the consultancy's Kowloon office services, said that leasing sentiment in Kowloon had weakened due to the uncertain outlook for both the local and global economies.
"More lease disposition cases were seen in Kowloon, indicating early signs of weakening demand," Mak said. "We maintain our conservative forecast that office rents will continue to drop in the first half of next year."
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