Mainland Chinese company LVGEM (China) Real Estate Investment Co. will purchase a building from Wheelock & Co. for HK$9 billion ($1.2 billion), setting a record price per square foot for a commercial building in Hong Kong’s Kwun Tong area.
A sum of HK$788 million has already been paid for the purchase, which is slated for completion by Dec. 29, according to a Wheelock statement to the Hong Kong Stock Exchange on Wednesday. A HK$4.6 billion payment will be made at the time, with the balance due in installments to Wheelock subsidiary Wharf (Holdings) Ltd., the company said.
It is the second-most expensive real estate deal in Asia this year, after CapitaLand Commercial Trust, Singapore’s biggest office landlord, agreed to buy BlackRock Inc.’s Asia Square Tower 2 for S$2.1 billion ($1.5 billion) in September, according to Sigrid Zialcita, managing director of research for Asia Pacific at Cushman & Wakefield Inc.
The deal by LVGEM is the latest case of mainland buyers purchasing entire buildings in Hong Kong. Known as 8 Bay East, the building enjoys a harbor-front view and is adjacent to properties bought from Wheelock by Citigroup Inc. in 2014 for HK$5.4 billion, and Manulife Financial Corp. for HK$4.5 billion in 2013.
The sale works out to be about $1,900 per square foot, unprecedented for the district, according to Dorothy Chow, regional director at Jones Lang LaSalle.
“This is a good price for the seller,” said Chow, who works in valuation services in Hong Kong. “This transaction is a historical high in that area.”
Wharf shares were up 2.9 percent at the midday break in Hong Kong, the biggest intraday increase since Sept. 5, and Wheelock shares gained 0.2 percent.