Hutchison Building implements reconstruction and rent increase to 180
The vacancy rate of Grade A commercial buildings in Central has been low, and the rents of commercial buildings have continued to rise. Cheung Kong (01113) has also implemented a redevelopment plan for Hutchison Building.
The market expects that after the completion of the reconstruction of Hutchison Building, the rent will increase by about 2 times to 180 yuan.
Cheung Kong: Enhance valuation, increase rental income
The redevelopment plan for Hutchison Building will begin in 2019 and is expected to be completed in 2023. The reconstructed Hutchison Building has a floor area of over 490,000 square feet, a height of 41 floors and 185 parking spaces.
According to the data, the Hutchison Building, completed in 1974, is located at No. 10, Xia’an Road, Central. It has a 23-storey building with a total floor area of about 500,000 square feet.
Mr. Zhou Weijun, Executive Director of Cheung Kong, said that the supply of commercial buildings in the core area of Central was in short supply. The market demand for office buildings in Hutchison Building was always strong. I believe that the redevelopment of Hutchison Building will enhance the valuation of the property, increase rental income and create value for shareholders. .”
Mr. Zhou also pointed out that the rebuilt Hutchison Building will continue to provide Grade A office floors with advanced equipment and a large increase in the number of parking spaces, which is more in line with the needs of today’s commercial users.
In addition, some foreign analysts said that although the short-term short-term will lose rental income during the reconstruction period, the building age based on Hutchison Building is too old, which limits the increase in rents. Therefore, the reconstruction of the group is a medium- and long-term positive factor. The location of the building is excellent, and the supply of Grade A commercial buildings in Central is small. It is expected that the rent after the redevelopment will be raised from the current 60 yuan to about 180 yuan.
The vacancy rate of Jiasha is only 1.5%.
Zheng Huaiwu, an analyst at CIMB International Securities, believes that the most insane period of office rent growth in Central has passed, but the rent is difficult to fall. It is expected to increase by about 3% each year. Therefore, after the redevelopment of Hutchison Building, the rent is expected to rise to about 150 to 160 yuan.
At present, the vacancy rate of office buildings in the core area of Central is only about 1.5%. Lin Haowen, senior director of Laifang and director of the valuation and consulting department, believes that it is a good time to rebuild the commercial buildings, and the existing tenants of Hutchison Building will have to relocate and find new office buildings. Short-term rents in Central and surrounding areas are also good for the good.
Knight Frank: After the reconstruction, the valuation rose to 35.5 billion
He estimated that the total investment cost of Hutchison Building Redevelopment (excluding land prices) was about $5.5 billion to $6.5 billion. After completion, the rent was at least $160. The price per flat was about $70,000. The long-term rental return ranged from 3 to 3.5. The valuation will rise to 35.5 billion yuan.
In addition to Hutchison Building, there will be a large number of office buildings in Central in the future for more than 50 years. Mr Lam said that there are many owners in Central who have demand for redevelopment of commercial buildings. However, in recent years, the price and the rent increase have been on the rise. Many owners are worried that the redevelopment will result in the loss of rental income during the redevelopment period and the loss of the existing tenants.