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Snack food producer Four Seas snaps up Hong Kong office space as bargains lure buyers

Grade A office buildings in Kowloon have lost about half of their value since the market peaked in end-2018

The slump in Hong Kong’s commercial property market may be ending, as opportunistic buyers like Four Seas Mercantile Holdings snapped up office space in Kowloon at a discount, after prices fell to the lowest level in almost six years.

The snack food manufacturer agreed to buy 25,000 sq ft of office units in Kwun Tong for HK$205.4 million (US$26.3 million), it said in a Hong Kong stock exchange filing on Monday. That works out to HK$8,226 per square foot, or 12.5 per cent below the asking price in the same building.

“With limited new demand and weak market sentiment, the prices of certain commercial buildings in Hong Kong have decreased significantly to a relatively low level,” chairman Stephen Tai Tak-fung said in the filing. “The acquisition represents a good investment opportunity.”

The group agreed to buy the entire 31st floor of a grade A office building on 41 King Yip Street with naming rights, and another office unit on the 21st floor of a building known as The Vision in the same area. They also include seven car parking spaces and certain signage space.

The seller is a unit of Max Paramount Business, an offshore company ultimately owned by a certain Choi Kin-yeung.

The acquisition underscores the depressed state of Hong Kong’s property market. Grade A offices in Kwun Tong and Kowloon Bay have lost about half of their value since the market peaked at 22,298 per square foot in the fourth quarter of 2018, according to government data. Distressed assets made up three-quarters of citywide sales in the first six months this year, according to a property agency.

“Grade A office capital values have already dropped by 43 per cent from the peak in late 2018, and there are expectations of interest-rate cuts” in the coming months, an agent said. “Some investors may consider entering the market early.”

Four Seas did not immediately reply to an email seeking further comment.

The new office units will provide rent savings in the long run, as well as improve the working environment for its employees, Tai said.

The group operates a retail chain selling snack foods and confectioneries in Hong Kong, mainland China and Japan. The group markets snacks such as Calbee, Haribo and Pocky and sells the Maid Brand of sausage and ham products. It also operates restaurants in Hong Kong and mainland China.

Four Seas had been renting office space at the Manhattan Place in Kowloon Bay since 2018. The group sold its office and warehouse in Sai Kung in 2017 for HK$368 million, making a HK$320 million profit on the deal, according to its previous stock exchange filing.

(南华早报)


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