Grittier Hong Kong Districts May Prove Alluring to Wealthy Investors
As Hong Kong tycoons sell office space in Central, the island’s business and retail hub, wealthy investors may do better to look for buying opportunities in less prestigious areas such as Island East.
Mainland Chinese corporations keen to give a good first impression to global customers have been bidding up rents in Central, home to botanical parks, colonial landmarks, and skyscrapers such as the IFC building featured in Batman and Lara Croft movies. That’s driven law firms and hedge funds to residential areas such as Island East’s Quarry Bay, named after the Hakka stonemasons who took rocks from its hillsides, or once-seedy shopping and nightlife districts such as Tsim Sha Tsui (TST), and Wan Chai and Causeway Bay.
The Bloomberg Intelligence Real Estate Dashboard shows how rental yields in the central business district are falling below those in some peripheral districts, as soaring rents fail to keep pace with rocketing real estate prices. The property arm of billionaire Li Ka-shing, dubbed “Superman” by Hong Kong media for his business acumen, sold his stake in the Center, one of Hong Kong’s tallest skyscrapers, in Central in November for HK$40.2 billion ($5.1 billion) to a consortium led by state-owned China Energy Reserve & Chemicals Group Co. Other developers are also raising funds before an expected rise in U.S. interest rates.
