Chinese real estate firm Sun Hung Kai Properties (SHKP) will be selling 30 percent of one of its commercial projects in Hong Kong to Ping An Life Insurance. The deal to buy the office portion of one of the city's most expensive projects is worth an estimated $1.45 billion.
In a statement released by SHKP on Wednesday, the company revealed that Ping An had agreed to buy the office portion of the project located on top of the West Kowloon high-speed rail station from both SHKP and the Kwok Family Companies, which both own the property. SHKP originally acquired the parcel of commercial land in November last year after paying a record $5.4 billion.
Ping An will be purchasing 25 percent of the office development under SHKP and 5 percent of the space being developed by the Kwok Family Companies. China's largest insurance group will pay HK$9.39 billion to SHKP and HK$1.87 billion to the Kwok Family Companies.
Once the deal is completed, the office spaces within the project will be divided amongst the three companies with SHKP owning 50 percent, Ping An 30 percent, and the Kwok Family Companies with 20 percent. The retail portion of the project will be fully owned by SHKP. The mega-development is estimated to have a cost of around HK$70 billion.
The project is being built on a parcel of land with an area of close to 635,000 square feet. The planned complex will have a usable floor area of about 3.17 million square feet for retail, hotel, and office use. The entire project is estimated to be about 12 percent larger than its neighbor, the International Commerce Centre, which is Kowloon's tallest skyscraper.
Industry experts have pointed out that the purchase is essentially a long-term investment for Ping An given that the project is still five years away from being completed. However, once it is finished, Ping An can expect a surge of interested firms from mainland China that want to set up operations in the city.
CGS-CIMB Securities analyst, Raymond Cheng, pointed out that mainland investors are still keen on investing in properties in Hong Kong. The office space that Ping An had acquired is one of the best locations in the city given its proximity to the high-speed rail West Kowloon station. Its location means that employees traveling from Shenzhen can reach their offices in less than 30 minutes and those from Guangzhou can arrive in less than an hour using the high-speed train.
