Restart and activate the industrial building and merge into a new front
In recent years, the cost of official land has been rising. Many developers have put resources into the acquisition of old buildings for reconstruction. Therefore, the acquisition of old buildings in the past two years has been quite lively, and the number of strong cases has also increased. Industry insiders pointed out that as the government restarts the industrial park activation policy, industrial and commercial mergers and acquisitions will become another front.
Although the details of the so-called “Revitalization of Industrial Building 2.0” have not yet been formally implemented, the biggest incentive for the new policy is that it can increase the non-residential plot ratio by up to 20% after activation, making it easier for the consortium to count. Gao Zhaoxuan, chairman of the pilot group, who has been engaged in mergers and acquisitions of old buildings for more than 12 years, pointed out that in the past, most of the acquisitions of the old buildings in the industrial buildings were concentrated in single-ownership transactions. However, after the Chief Executive announced the plan to restart the revitalization of the industrial buildings, the funds and developers were more dispersed in the near future. The old buildings of the industrial buildings of the title are also of interest. If you encounter a project with superior location, you will even buy it.
Changsha Bay San Po Kong low water attraction
For example, the Cheung Sha Wan Jia Ming Factory Building has a site area of about 30,000 square feet. With a plot ratio of 12 times, the reconstructed floor area is 360,000 square feet. The pilot group carried out mergers and acquisitions at the end of last year, and once acquired nearly 80% of the title. “We submitted the project redevelopment plan to different developers for reference. Two Mainland developers and one large local developer expressed interest in the acquisition and the offer was quite aggressive. Unfortunately, the small owners continued to reverse their prices and the acquisition failed.”
Gao Zhaoxuan pointed out that the acquisition of industrial buildings is more difficult than residential buildings, because the process involved in relocating industrial buildings and companies is far more complicated than moving a family. However, as the Government has set up a number of hot tricks in the residential market, industrial and commercial properties are relatively flexible in terms of dismantling, water supply and speculation, making it easier for developers to get back to the time. He expects that more consortia will be looking to switch to the industrial market in the future. The old industrial buildings in Changsha Bay and San Po Kong are relatively low-water and more attractive.
On the other hand, many mainland developers have come to Hong Kong to absorb land in the past two years. Gao Zhaoxuan pointed out that in fact, in recent years, there have been more mainland developers developing the old building M&A market. For example, Vanke, Agile, Evergrande and other big brands have also come to Hong Kong to acquire old buildings. “Compared to Hong Kong developers, mainland developers are slightly more aggressive in terms of purchase price, about 10% higher than Hong Kong developers; they mainly buy more than 7,000 to 10,000 square feet of land. I believe that mainland developers are not used to developing nano-buildings. However, Mr. Gao said that as mainland developers enter the market and decide to be slower than Hong Kong’s developers, Hong Kong developers still have certain advantages.
Over 50 years old buildings, 500 buildings per year
As for the prospects, Mr. Gao said that individuals are very confident in the old building M&A market because at least 500 old buildings with an age of more than 50 years are added each year. As long as they collect 80% of the ownership, they can apply for a strong shot.
He also appealed to the Government to face up to market demand, such as relaxing the plot ratio of old buildings and the old building projects of civil service cooperatives. It hopes to reduce the developer’s high land price, enhance redevelopment opportunities and increase market supply.