![Tsang Shing-bor sold 1-7 on Ki Lung Street to Lofter](https://www.mingtiandi.com/wp-content/uploads/2020/11/1-7LiKungSt-prop_IMG_7988-1.jpg)
1-7 Ki Lung Street will soon host a new condo tower
Hong Kong’s investment sector may be reeling from nearly two years of turmoil, but local developer Lofter Group envisions a bright future. On 24 November, the redevelopment specialist and partner Alphalex Capital agreed to acquire 1-7 Ki Lung Street in the Prince Edward neighbourhood of Kowloon’s Yau Tsim Mong district.
Lofter and Alphalex will acquire the pair of buildings from “Shop King” Tang Shing-bor and redevelop them as a residential-commercial mixed-use tower.
The purchase agreement was signed one day ahead of Chief Executive Carrie Lam’s annual policy address, which this year included the abolition of the double stamp duty (DSD) on commercial properties. Lofter paid HK$347 million ($45 million) for the site, according to a local media report, and under the outgoing DSD would have needed to pay 8.5 percent tax on the transaction.
JLL was hired to represent Tang in the sale of the Ki Lung buildings at HK$450 million — a 25 percent discount from an earlier asking price of HK$600 million. Lofter ultimately picked up the assets at a 42 percent markdown from the original price.
Meeting Kowloon Residential Demand
The 23-storey project on a 3,866 square foot (360 square metre) lot has a maximum plot ratio of 9, which will yield a gross floor area of up to 34,794 square feet, an accommodation value of about HK$9,973 per square foot.
![Carol Chow CEO](https://www.mingtiandi.com/wp-content/uploads/2020/11/Carol-Chow-LOFTER-1-400x231.jpg)
Lofter founder and chair Carol Chow
“There is continuing demand for small-to-medium-sized apartments in core locations and it’s particularly strong in Prince Edward, where there [is] limited supply with only a few redevelopment projects of similar scale completed in the recent decade,” said broker JLL’s Lydia Poon, director of Hong Kong capital markets.
The limited supply of urban development sites in Hong Kong and Kowloon factored into the decision regarding Lofter’s fifth acquisition this year. In a statement released by JLL, Lofter founder and chair Carol Chow said she was optimistic about the prospects for the Yau Tsim Mong district, where the project is located, given the government’s infrastructure improvements and surrounding regeneration.
Lofter Continues Urban Renewal Ambitions
Since its founding a decade ago, Lofter has been busy taking advantage of government policies to convert industrial buildings into commercial space and making plans to reinvigorate some of Kowloon’s crustiest corners. To date, the group has launched over 1,300 of its signature Supreme Workshops offices across key districts, including Quarry Bay and Kowloon East.
In 2018, Lofter purchased 108-114 Bedford Road in grungy Tai Kok Tsui for HK$243 million ($63.7 million) and the adjacent 100-106 Bedford Road for HK$260 million. The intention is to redevelop the two sites into potentially 120,504 square feet of Grade A office space, tentatively named One Bedford Place, per the developer’s website.
Lofter is sticking with its regeneration model and plans to inject HK$3 billion into the five sites the developer has picked up this year.
In residential, Lofter in March acquired a 3,310 square foot site at 181-183 Sai Yee Street in Mongkok for HK$310 million and in September picked up the 2,800 square foot 2C-2D Boundary Street site in Tai Kok Tsui for HK$135 million. Both are residentially zoned for a maximum plot ratio of 9. Along with the Ki Lung site they are targeted as luxury flats. Also in Tai Kok Tsui, Lofter in March announced it had purchased 71-75 Bedford Road, paying HK$192 million for the mixed-use site. Lofter plans to transform the property into Two Bedford Place as a follow-on to its 2018 acquisition.
On the commercial front, in September the company paid HK$267 million to acquire majority ownership of 11-13 Nanking Street in Jordan, adding a 2,768 square foot site to its portfolio that can be developed into as much as 33,216 square feet of finished accommodation.
Shop King Moving On
Tang, along with the Stan Group family office that controls a HK$80 billion asset portfolio, has been on a sales tear in 2020, divesting of nearly HK$1 billion in assets so far.
The sales coincide with an August court settlement over HK$12 million in unpaid government rates at a Tsim Sha Tsui hotel property between October 2019 and July 2020. Another plot line is market speculation that the tycoon is under financial pressure stemming from the rapid expansion of the group’s Living Group hospitality arm, now struggling due to plunging tourist arrivals.
Since its founding five years ago, Living Group has amassed a hotel portfolio of 3,300 rooms across five brands, according to the South China Morning Post. Stan Group told the newspaper that it constantly reviews its portfolio and “sells non-core assets at favourable prices”.
Tang has been selling assets across the city, offering up HK$3 billion worth of property this year. In August, he entered into final negotiations to sell a 202,361 square foot asset at 17-19 Lok Yip Road in the New Territories for HK$820 million to a division of mainland conglomerate China Resources.
That same month, Tang was reportedly in negotiations to sell the 13-storey Woon Yin building in Wan Chai for HK$450 million, 18 percent off its 2018 asking price of HK$550. In September, Tang offered for sale 339-345 Shanghai Street in Yau Ma Tei at HK$238 million. And in October, the Hong Kong Economic Times reported that Stan Group sold a commercial building at 80 Kimberley Road in Tsim Sha Tsui for HK$388 million.
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