Gaw Capital Partners to acquire 17 shopping centers in Hong Kong

Gaw Capital Partners, through a fund under its management, and a consortium of partners, including Goldman Sachs, have won a bid to acquire a retail portfolio comprising 17 shopping centers in Hong Kong from Link Asset Management Limited for HK$23 billion ($2.95 billion), an average price of around HK$7,922 per square foot ($1,015 per square foot), excluding parking.

The portfolio is comprised of a number of strategically located properties across Kowloon and the New Territories that sit in the heart of densely populated communities and in close proximity to MTR stations.

The portfolio totals 2.2 million square feet of prime retail space and comes with more than 8,000 parking spaces that are connected to highly convenient transport links.

The shopping centers included in the portfolio are: Cheung Hang Shopping Centre, Kai Yip Commercial Centre, Kam Tai Shopping Centre, Lei Cheng Uk Shopping Centre, On Ting Commercial Complex, Shek Lei Shopping Centre I & II, Tai Wo Hau Commercial Centre, Tsz Ching Shopping Centre, Yau Oi Commercial Centre and Yung Shing Shopping Centre, Kwai Fong Plaza, Kwai Shing East Shopping Centre, Lai Kok Shopping Centre, Lee On Shopping Centre, Retail and Car Park within Shun Tin Estate, Tsing Yi Commercial Complex and Lions Rise Mall.

“We are delighted to have won the bid together with our consortium partners to acquire and manage these assets,” said Kenneth Gaw, president and managing principal of Gaw Capital Partners. “Despite the rise in e-commerce, we believe retail facilities such as these continue to be highly important foundations of community life, and we recognize their strong potential to thrive in the years ahead. We look forward to applying our deep experience in repositioning commercial property to add significant strategic value to these shopping centers.”

Mid-priced retailers such as cosmetic and apparel brands remained active in the leasing market, according to Cushman & Wakefield. In contrast, several high-end luxury retailers, especially those that expanded rapidly over the past several years, consolidated their shops along second-tier streets to cut costs.

Cushman & Wakefield expects retailers, especially those engaged in the watches and jewelry business, to continue to consolidate and relocate their shops to second-tier streets while only keeping a few strategically located shops in core areas. Meanwhile, leasing demand is likely to be supported by new set-up requirements from cinema operators with a handful of them actively negotiating spaces in decentralized and neighborhood areas.

With rents retreating by 9.6 percent through the first three quarters, Cushman & Wakefield expects Central high street rentals to continue to come under pressure as several retailers look to give up their shops ahead of lease expiries. Rents in Central are forecast to decrease an average of 10 percent to 15 percent for the full year of 2017.

JLL reported during the third quarter the leasing activity in Hong Kong was dominated by renewals as some landlords cut rents to retain tenants ahead of the year-end holiday season. Food & beverage, and cosmetic retailers took advantage of the pullback in rentals to undertake expansions.