Date
17 October 2018
Commercial landlords in Hong Kong's Causeway Bay area have reaped huge returns on their investments, thanks to a surge in property values and rental prices. Photo: Bloomberg
Commercial landlords in Hong Kong's Causeway Bay area have reaped huge returns on their investments, thanks to a surge in property values and rental prices. Photo: Bloomberg

Percival Street shop owner rings in 1,000-fold returns

You do not need to be a Mark Six winner to get thousand-fold returns.

Perhaps you should have just bought a shop in the bustling Causeway Bay area at the right time.

Take a look at the latest transaction in the prime commercial and shopping hub: a unit located at 66 Percival Street has been sold for HK$250 million, according to Hong Kong Economic Journal.

Transacted at HK$260,000 per square feet, the seller pocketed a neat HK$249.7 million in net profit for the property as he bought it for a mere HK$220,000 in 1971.

Before the sale, the landlord was reported to be receiving HK$400,000 in monthly rent from the tenant, 3 Mobile, a Li Ka-shing group entity.

In other words, the value of his shop went up a whopping 1,135 times. By comparison, the Hang Seng Index was up around 100-fold over the past 47 years.

The deal marked strong proof of an old Chinese saying that a commercial shop investment could benefit three generations.

The location was also perfect given that it happened to be Causeway Bay, where commercial rentals are trying to return to the 2014 peak after a slowdown in mainland tourists, who largely contributed to the rental spike earlier due to binge-shopping of items ranging from milk powder to jewelry.

Rental prices in Causeway Bay have almost tripled in the past 10 years. John Tong Chor Nam, the buyer of 66 Percival Street, had also bought a nearby shop for HK$86 million.

The shop located at 64 Percival Street was reportedly leased for a monthly rental of HK$540,000 to a jewelry shop in 2014 before it was revised to HK$380,000 starting from 2017.

It is not the first time a shop owner clocked in over thousand-fold returns. In 2014, a shop at Lee Garden Road, Causeway Bay, was sold for HK$252.8 million, marking a more than 1,742 times increase since the previous landlord bought in 1963.

The all-time record for the best shop returns, however, belongs to the previous owner of 76 Percival Street. In 2011, he sold it to Emperor International for HK$380 million.

His return? A whopping 2,532-times, as he bought it in 1964 – even before the 1967 riot, and way before the birth of Mass Transit Railway.

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RC

EJ Insight writer

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