When China Mobile bought a commercial in New Territories for HK$3.6 billion ($46 million) at a government auction last month, the continent’s telecommunications giant outperformed its nearest competitor by 56%, according to a Department of Land announcement on July 7.
Through a subsidiary, the world’s largest wireless network operator agreed to pay a HK$5.6 billion ($722.6 million) premium over the auction minimum to secure 50-year land use rights for the industrial parcel at the junction of Tsung Tau Ha Road and Kwei Tei Street in Sha Tin.
The success offered was 70% higher than the 3.28 billion Hong Kong dollars proposed through the third-largest bidder, according to the Department of Land, with China Mobile spending more on some of Hong Kong’s largest developers so it is expected for a knowledge center in the new northern territories.
Among the failed bidders are local heavyweights, which are added to Li Ka-shing’s CK Asset Holdings, Sun Hung Kai Properties of the Kwok family and Joseph Lau’s Chinese Estates Holdings. Singapore-controlled Mapletree Investments Pte also made an offer that responded to China Mobile’s be offer.
The lowest offer featured H$738 million for the property, five minutes walk from Fo Tan MTR.
With the capacity to yield up to 940,000 square feet (87,328 square metres) of gross floor area, China Mobile is paying the equivalent of HK$5,967 per square foot for the project, making it the most expensive industrial site sold in Hong Kong over the last two years.
“I think the value is reasonable, it’s higher than my expectations,” said Thomas Lam, knight frank Hong Kong’s ceo. “I think the site will evolve into a high-level knowledge center rather than a classic commercial or logistical site.”
With a market capitalization of HK$1.15 trillion and around 950 million cell phone users according to its 2019 annual report, the Beijing-based company’s 5G communications service is probably the main driving force in the offering. In April, China Mobile implemented a comprehensive 5G policy in Hong Kong, which will require more servers and PC systems to function.
For investors and end-users, the media of knowledge has a precious asset in 2020. Last month, the U.S. knowledge medium REIT Digital Realty opened its server for now in Hong Kong, which is about to rise 24 MW to its capacity in the city.
Hong Kong’s allocation came a few months after Alibaba Cloud, a network department of the continent’s e-commerce giant, announced in April that it plans to invest $28 billion in knowledge centers and other cloud infrastructure over the next 3 years.
“We have noticed an increase in genuine real estate investment in the middle area of knowledge in recent years, and they are accelerating through the ongoing coronavirus pandemic,” said Rohit Hemnani of JLL, director of opportunities and money markets.
Once the Sha Tin Knowledge Center is complete, China Mobile will load the new server hangar into a couple of services terminated in London and Singapore over the next year. The telecommunications operator already has a knowledge centre in Hong Kong’s Tseung Kwan O region.
According to CBRE Research, intermediate knowledge opportunities have a domain of interest to developers and investors in Hong Kong over the more than two years, with 4 million square feet of dominance leased or negotiated for remodeling.
“While the limited source of land, the maximum load of genuine real estate, and the long periods for the availability of electricity are some of the most demanding situations for the progression of new knowledge centers in Hong Kong, suggests the shift from spending patterns to online intake a greater need for knowledge of the commercial area. Land transactions that have broken recent records, “Samuel Lai, senior director of advisory and transactions at CBRE Hong Kong.
Thanks to the expansion of knowledge centers in the city by the end of March this year, Hong Kong’s overall IT capacity had increased to 379.6 MW, enough to force more than 1.5 million physical servers. This represents a 27% increase from 299.9 MW in position as of March 30, 2019, and CBRE predicts that Capatown will accumulate over another 215 MW in the coming years.
China Mobile’s commercial acquisition adds to a number of investments in Hong Kong through continent giants this year.
Last week, China Resources Capital, the equity control department of one of the continent’s largest state conglomerates, led the $300 million acquisition of Hong Kong-based City Super supermarket chain, with a 65% stake in the high-end. store of hong Kong investors.
In July, China Resources Beer, a unit of the same group founded in Shenzhen, bought the Kader Industrial Center in Hong Kong’s Fanling region from local tycoon Tang Shing-bor for H$820 million.
In January, Shenzhen-based Kaisa Group Holdings acquired near the east coast of Castle Peak Bay in the New Territories for H$3.5 billion. Four months later, the developer acquired a 2718-square-foot mixed use in Mong Kok for HK$85.9 million.
Also in April, China’s Ping An Insurance invested much of its $1.18 trillion in asset control to buy a 30% stake in a Sun Hung Kai trade allowance in West Kowloon for HK$11.27 billion.