Agile Group Buy Site in Hong Kong’s Quarry Bay for $51M

998 King's Road Hong Kong

998 King’s Road might look less peaceful soon

Outbound investment in real estate by mainland companies has dropped by more than half this year according to analysts, but having the world’s hottest real estate market just across the border means that some developers from the middle kingdom are still finding a way to grab a piece of Hong Kong.

The latest cross-border property investor this week is Guangzhou-based Agile Group Holdings which bought a 10,000 square foot (929 square metre) residential site at 992 to 998 King’s Road in the Quarry Bay area, according to an account this week in the Hong Kong Economic Times.

The mainland group bought the former subsidised housing project via a collective purchase from its previous owners for HK$400 million ($51.2 million), in a city where average home prices rose 15 percent this year, according to the International Monetary Fund.

80,000 Square Foot Project on the Way

Agile Property Chairman Chen Zhuolin

Agile Property Chairman Chen Zhuolin is about to plead for converting the land use rights in Quarry Bay

Should the mainland group be able to secure government redevelopment approval, it says it plans to build an 80,000 square foot commercial and residential project on the eastern Hong Kong island site. The license to redevelop is expected to require a substantial government land premium which is predicted to bring the effective price of the site to over HK $13,000 ($1,663) per square foot of buildable area, according to an account in local news site Ming Pao.

While Agile’s name didn’t appear on the sales agreement with the former owners of the 1950s era civil servant housing project, records from Hong Kong’s Land Registry showed a clear link to the developer known for its luxury resorts on Hainan Island, according to an account in local news site Mingpao.

The government records list the buyer as a private company whose directors include Agile Group chairman and president Chen Zhuolin’s brother Chen Zhuoxi, as well as his wife, Lu Qianfang. Lu also serves as vice chairman of Agile Group while Chen Zhuoxi is a board member and vice president.

Mainland Firms Drawn By Returns and Risk Diversification

Part of the appeal of Hong Kong projects among mainland firms is an opportunity for developers to diversify their risks, according to Colliers International executive director Antonio Wu.

“Unlike mainland China, regulations on residential transactions are quite open, so for the mainland developers, Hong Kong is still a good place to be,” the veteran property consultant noted.

As for the capital controls, Wu believes that the new regulations would not necessarily be a factor for mainland firms hoping to purchase Hong Kong assets, especially residential sites, as many of the companies have sufficient offshore capital for their cross-border investments.