World’s priciest skyscraper hasn’t escaped Hong Kong’s downturn

The Center, which sold for $5.2B in 2017, has seen vacancies rise and rents drop

National Weekend Edition /
Oct.October 04, 2020 09:00 AM
The Center in Hong Kong (Wikipedia)

The Center in Hong Kong (Wikipedia)

The economic downturn in Hong Kong has turned the world’s most expensive skyscraper into a headache for its owners.

In 2017, a group of buyers paid $5.2 billion for Li Ka-shing’s 75 percent stake in The Center, Hong Kong’s fifth-tallest tower. While the consortium was initially able to flip floors for quick profits, it has struggled to close deals since mid-2019, when protests against mainland China started in the territory, according to Bloomberg.

Now, about 20 percent of the building is unoccupied and asking rents have dropped by 20 percent. Only one property has sold in the building so far this year, and it was deeply discounted from early 2019 prices, according to Bloomberg. Around 20 percent of the building is empty and rents are down 20 percent from the same time last year.

“It was a reasonable investment decision back then,” said Knight Frank’s Thomas Lam. “But now, as rental yields and office demand decline amid the worsening economy, buyers are much more reserved.”

Economic tension between the U.S. and China and the coronavirus pandemic have led to uncertainty in the Hong Kong market, with nearly every property type seeing prices fall. Earlier this month, the U.S. government sold an apartment complex in one of Hong Kong’s most expensive neighborhoods for roughly $7,000 per square foot — a steep discount.

Office vacancies are also at a 16-year high. Valuations may fall by as much 20 percent this year, according to Jones Lang LaSalle. [Bloomberg] — Dennis Lynch 


Related Articles

arrow_forward_ios
Equitable CEO Mark Pearson and Fisher Brothers’ CEO Ken Fisher with 1345 Avenue of the Americas (Google Maps)
Equitable Life Insurance inks 130K sf lease for new office
Equitable Life Insurance inks 130K sf lease for new office
21 Borrett Road 
Hong Kong condo sale shatters record in slumping market
Hong Kong condo sale shatters record in slumping market
The Hong Kong parcel sold for around $6,451 per square foot. (Getty)
Undeveloped 1.3 acres in Hong Kong sells for $935M
Undeveloped 1.3 acres in Hong Kong sells for $935M
Vornado's Steven Roth and One Park Avenue (Photos via Getty, Vornado)
Vornado to get $525M to refi One Park Avenue
Vornado to get $525M to refi One Park Avenue
Chairman Edmund Cheng (Photos via Esplanade; Unsplash)
Mapletree Investments bets big on European office market
Mapletree Investments bets big on European office market
Tishman Speyer CEO Rob Speyer and renderings of Foundry  I. (Getty, Cielo)
Tishman Speyer jumps on Austin bandwagon with $150M deal
Tishman Speyer jumps on Austin bandwagon with $150M deal
Industrious CEO Jamie Hodari (right). Inset (clockwise): TF Cornerstone’s Frederick Elghanayan, Vornado’s Steven Roth, LIVWRK’s Asher Abehsera, Thor Equities’ Joseph Sitt, and George Comfort & Sons’ Peter Duncan (Photo Illustration by Kevin Rebong for The Real Deal)
As flex-office space contracts, Industrious grows NYC footprint
As flex-office space contracts, Industrious grows NYC footprint
1345 Sixth Avenue, 11 Madison Avenue top the list of January deals. (Sapir, WikiMedia)
Manhattan office availability hits record-high 14.9%
Manhattan office availability hits record-high 14.9%
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...