Cheung Kong Center: For those who can pay the top rental dollar

March 19, 2019 11:12
The Cheung Kong Center building (center) has become a super-premium spot in Hong Kong's commercial property landscape, with rents hitting new highs. Photo: Bloomberg

Tycoon Li Ka-shing is a "Superman" in more ways than one, with the list of his business and investment successes too many to recount. But one aspect that is coming into renewed focus is his impressive track record in gaining top value for his properties. 

In my previous column, I mentioned that Li's home was at the No. 3 spot in Hong Kong in terms of perceived rental value. Now, we have data that the billionaire's office does even better, as it sits right at the very top on the key metric.

According to the Ratings and Valuation Department, Li's Cheung Kong Center ranks No.1 in its segment in terms of rental value.

Recently we had news that a mainland financial firm signed up for an office unit in the building at a monthly fee of about HK$225 per square foot, setting a new record for office space in Hong Kong.

Before that, the previous record stood at HK$220 per square foot, a deal struck last year for a unit at the International Financial Centre Two tower.

According to the Ratings and Valuation Department, the office rental valuation of the unit at Cheung Kong Center was estimated at HK$26.45 million, up 10 percent from a year ago.

The rental change was higher than the unit at IFC2, which was jointly developed by Henderson Land and Sun Hung Kai Properties, whose valuation was up 5 percent for the calendar year 2019/2020 compared to the previous fiscal.

This makes us wonder about the value of the space that Li, who retired last May and became a senior adviser to the two flagships – CK Hutchison and Cheung Kong Asset - he founded, personally occupies at Cheung Kong Center, where he still occasionally drops by for business.

Cheung Kong Center made headlines last summer as it set a new rental record at that time. The transaction involved leasing 20,000 square feet of the 45th floor to BitMex, a trading platform for bitcoin and other cryptocurrencies.

Not surprisingly, the elevated rents are prompting some existing tenants to look for other options. Among such entities is the Securities and Futures Commission, which had been paying about HK$200 million every year since 2013 for space at the Cheung Kong Center, or about HK$120 per square foot.

Last month, the securities regulator announced that it would move to Quarry Bay and save HK$1 billion in the next eight years.

Even Goldman Sachs, the largest tenant, last year signed a five-floor lease at Lee Garden 3 in Causeway Bay for its back-office staff in a move that would save the top investment bank some 30 percent in rent.

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EJ Insight writer