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Peggy Sito

Owner of 46-year-old Central building plans grade A commercial project on the site

The 46-year-old Luk  Hoi Tong Building on Queen's Road Central will be demolished by the end of this year and redeveloped  into a 27-storey grade A commercial property in about three years.

The redevelopment comes as several hotel and commercial properties are being rebuilt or marked for redevelopment as new grade A office supply in Central will fall to zero in the next few years  amid  growing demand from  foreign companies.

Other properties to be rebuilt include Dragon Seed Building at the junction of Queen's Road Central and Li Yuen Street East, while potential redevelopment candidates include Ritz Carlton Hotel,  Ananda Tower, and towers one and two of Crocodile House.

Jeffrey Chan, an executive director of Luk Hoi Tong, said in view of the optimistic outlook for the office market, the redevelopment  aimed to upgrade the property, which was built in early 1960s. The redevelopment is also prompted by the underutilisation of the property.

The plot ratio has not been fully utilised and redevelopment can maximise the value of the site, according to Mr Chan.

With a site area of about 10,000 square feet, the building,  to be completed in three years,  would provide 150,000 to 160,000 square feet of gross floor area, he said.

'It will have retail space  from the basement to the third floor,' he said.

The  building is designed by Rocco Design, the architect of One Peking Road in Tsim Sha Tsui.  It will be a modern edifice emphasising  lighting and transparency with the use of glass  panels.

Mr Chan said the company hoped to improve the building's tenant mix, from small local tenants to international companies  that can take up  whole floors of space.

The company also hopes to lure big retail brands by providing them two-floor duplex shops.

Existing rents  at Luk Hoi Tong's office properties  range from HK$20 to HK$30 per square foot but property consultants expect the company  to see these jump as much as fivefold.

Alan Lok, senior director of office services at CB Richard Ellis, expects  office rents  in the redevelopment project  to reach HK$100 a square foot in terms of net area, as York House, the only new office supply in Central, fetched HK$120 a square foot.

Alnwick Chan Chi-hing, executive director of Knight Frank, said  redeveloping the  building was justifiable as  its office space was inefficient and the retail space not well-developed.

'The building has a long frontage on Theatre Lane, which could attract international brands to open retail shops,' he said.

Mr Alnwick Chan believes many landlords redevelop and renovate their office buildings in Central  because there was no new office supply.

Colliers International research and consultancy director Simon Lo said: 'It will be the first time over the last  20 years that there will be no new office supply in Central in two years. You can imagine how tight office supply is in Central.'

Citigroup Property Investors acquired Ananda Tower and towers one and two of Crocodile House in Central for about HK$1.52 billion last month.

The offices,  at Connaught Road Central near Hang Seng Bank Building and One International Financial Centre, have a site area of about 12,000 square feet.

Property agents expect Citigroup  to be studying the possibility to redevelop the three buildings into a grade A office property with a total gross floor area of 18,000 sq ft.

Lai Sun Development also  wants to redevelop the Ritz-Carlton hotel into an office building for greater returns.

New World Development has demolished Dragon Seed Building  and six   old buildings nearby.  The site will be developed  into a 28-storey office building with a  gross floor area of 132,200 sq ft. The office  block is scheduled for completion in 2009.

Meanwhile,  a joint venture  among Morgan Stanley, Global Gateway and Pamfleet (HK) has planned to invest up to HK$200 million  on the renovation of the Hang Seng Building. The work is scheduled for completion in the middle of next year.



Luk Hoi Tong faces wrecker's ball