Site near Kowloon station bolsters district's business hub ambitions
3 June 2009
South China Morning Post

A large site above the West Kowloon terminus of the Guangzhou-Shenzhen-Hong Kong Express Rail Link next to the Kowloon MTR station has been zoned for commercial use, boosting the bid by city planners and developers to establish a new core business district in the area.

The 633,321 square foot site could support a gross floor area of 3.17 million square feet, 14 per cent more than the total gross floor area of 2.78 million sq ft provided by One and Two IFC in Central and 26 per cent more than the 2.5 million sq ft office space provided by neighbouring International Commerce Centre (ICC).

Constraints on space in Hong Kong have so far hampered efforts to create a decentralised business district. With the zoning decision announced last week by the Planning Department, West Kowloon now has the potential to become a second business district, offering the opportunity for the creation of new offices, hotels and an exhibition or convention hall.

According to the department, the site has the potential to be developed into a rail and high-grade office hub as the West Kowloon terminus of the express rail link will be located there. The railway is scheduled for completion in 2014 or 2015.

Sun Hung Kai Properties' ICC is currently the sole office building in the Kowloon Station area.

The ICC has already attracted major financial institutions as tenants in office space already completed and leased out, including investment banks Morgan Stanley and Credit Suisse.

Average rents in the ICC are HK$30 to HK$40 per square foot, based on gross floor area, well below the average rent of about HK$100 per square foot in Central.

Alan Lok, a senior director in the office services department of property consultant CBRE, believes rents in the Kowloon Station area will surpass those in Causeway Bay, Wan Chai, Quarry Bay and Sheung Wan in the long term and that it will become the second-most expensive office area, together with Admiralty.

"The latest town planning shows the government saw the area has the potential to become a new business area after the success of ICC," Mr Lok said.

But not all analysts agree the area could be developed to rival Central/Admiralty as a core business district.

"Kowloon Station is not located on a main route. And the district is still immature," said DTZ office agency director Andy Yuen Chun-yin.

Simon Lo Wing-fai, a director of research and advisory with Colliers International, said that since the two sites offered a combined gross floor area of only 5.67 million sq ft, it would not be enough to convert the new district into a commercial hub.

"We need a minimum office area of 7 million or 8 million sq ft to develop a commercial hub," Mr Lo said.

But he said rents in the area could rise to become the second-most expensive in Hong Kong, along with Admiralty, because of the advantage of the new rail links.

London offers rival hub lessons
24 October 2007
South China Morning Post

Hong Kong's 118-floor International Commerce Centre now reaching for the skies in Kowloon will end Two IFC's reign as the city's tallest building when it is completed in 2010.

Its imposing views across the harbour and glittering new office accommodation could also provide an irresistible drawcard to blue-chip banking tenants and usurp Central as the new financial district, industry insiders say.

But judging by the evolution of financial districts in other cities, notably London's rival centre Canary Wharf, both sides of the Hong Kong harbour could be winners.

The move by many banks and financial firms to Canary Wharf from London's centuries-old Square Mile in the 1990s occurred for many of the same reasons that investment banker Morgan Stanley, for instance, is planning to move to Kowloon's ICC - space and efficiency.

China-Britain Business Council chairman Sir David Brewer said Canary Wharf, the city's former dockland, had provided much needed expansion room for the country's financial industry.

"The City of London had height restrictions so we could not have buildings in the area of 30 to 40 floors," Sir David said. "This limited the supply of office space and there was a strong demand to develop another financial centre."

Big-name tenants including Barclays, HSBC and Reuters took the opportunity offered by Canary Wharf and relocated, although about 300,000 financial professionals still work in the historic Square Mile, compared with 80,000 at Canary Wharf.

John Stuttard, the lord mayor of the City of London, said Canary Wharf was not a competitor to the Square Mile in terms of fighting for tenants. "The Square Mile and Canary Wharf are complementary to each other, not competitors,'' he said.

Law firm Clifford Chance moved about 3,000 staff from the Square Mile to Canary Wharf in 2004 and partner Roger Best said most staff were happy with the relocation, although some were unhappy about higher transport costs and commuting time.

Similar concerns have been voiced by employees in Hong Kong, who are worried the move to the ICC may cost them more in terms of time and money when they travel to meet clients in Central.

But Mr Best, who worked in the Hong Kong office of Clifford Chance in Central for seven years, believed another financial centre in Kowloon would work well.

Jake Smith, a vice-president and head of marketing at FXMarketSpace who previously worked for banks in the City of London, said a major benefit of the move to Canary Wharf was that staff could be consolidated in a single location.

For Kowloon to emerge as a complementary centre to Central, Mr Smith said it would be important to ensure that concerns regarding time and money spent commuting were addressed.

London offers rival hub lessons
24 October 2007
South China Morning Post

Hong Kong's 118-floor International Commerce Centre now reaching for the skies in Kowloon will end Two IFC's reign as the city's tallest building when it is completed in 2010.

Its imposing views across the harbour and glittering new office accommodation could also provide an irresistible drawcard to blue-chip banking tenants and usurp Central as the new financial district, industry insiders say.

But judging by the evolution of financial districts in other cities, notably London's rival centre Canary Wharf, both sides of the Hong Kong harbour could be winners.

The move by many banks and financial firms to Canary Wharf from London's centuries-old Square Mile in the 1990s occurred for many of the same reasons that investment banker Morgan Stanley, for instance, is planning to move to Kowloon's ICC - space and efficiency.

China-Britain Business Council chairman Sir David Brewer said Canary Wharf, the city's former dockland, had provided much needed expansion room for the country's financial industry.

"The City of London had height restrictions so we could not have buildings in the area of 30 to 40 floors," Sir David said. "This limited the supply of office space and there was a strong demand to develop another financial centre."

Big-name tenants including Barclays, HSBC and Reuters took the opportunity offered by Canary Wharf and relocated, although about 300,000 financial professionals still work in the historic Square Mile, compared with 80,000 at Canary Wharf.

John Stuttard, the lord mayor of the City of London, said Canary Wharf was not a competitor to the Square Mile in terms of fighting for tenants. "The Square Mile and Canary Wharf are complementary to each other, not competitors,'' he said.

Law firm Clifford Chance moved about 3,000 staff from the Square Mile to Canary Wharf in 2004 and partner Roger Best said most staff were happy with the relocation, although some were unhappy about higher transport costs and commuting time.

Similar concerns have been voiced by employees in Hong Kong, who are worried the move to the ICC may cost them more in terms of time and money when they travel to meet clients in Central.

But Mr Best, who worked in the Hong Kong office of Clifford Chance in Central for seven years, believed another financial centre in Kowloon would work well.

Jake Smith, a vice-president and head of marketing at FXMarketSpace who previously worked for banks in the City of London, said a major benefit of the move to Canary Wharf was that staff could be consolidated in a single location.

For Kowloon to emerge as a complementary centre to Central, Mr Smith said it would be important to ensure that concerns regarding time and money spent commuting were addressed.

they're rather different cases and it's hard to compare like this id say!

canary wharf to start with covers a much bigger area and the possibility for expanding is endless. as for west kowloon, most of the lands have been designated and the room for commercial developments is extremely limited, thanks to all the residential developments above kowloon station which could have been ideal for offices.

Rising rents spark calls for new CBD
West Kowloon seen as alternative as office costs reach record levels in congested Central
13 August 2008
South China Morning Post

Soaring office rents in the prime business district of Central have triggered calls from some analysts for the government to use its zoning powers and control over infrastructure planning to create a new central business district in West Kowloon.

But others say sufficient space can be created to allow for expansion of the existing CBD and that spending money to create a second core financial district would be a waste of resources.

"We need to create a new CBD in West Kowloon. The existing office district is simply too overcrowded and rents are outrageous," said Eric Wong Chun-yu, co-head of Asia real estate research at investment banking group UBS.

To foster the creation of a second CBD, the government should rezone land in the reclamation area, except the cultural facilities planned for the West Kowloon cultural hub, for purely commercial use and promote its development as a transportation hub between Hong Kong and the mainland, Mr Wong said.

West Kowloon will be the terminus of a proposed high-speed rail link to Guangzhou, and Shenzhen via Hong Kong. Travel time will be 48 minutes when the service starts in 2015, and three minutes to Central.

But while agreeing that CBD office rents had reached unsustainable levels that were affecting company earnings, leading property analyst and mortgage financier Leland Sun said creating a new CBD in West Kowloon was not the solution.

Rather than building new waterfront headquarters for itself adjacent to the old Prince of Wales Building (now the headquarters of the People's Liberation Army in Hong Kong), the government might have negotiated with the PLA to relocate from the site, said Mr Sun, managing director of Pan Asian Mortgage Group.

Together with the 0.42 hectare Central Market site, which is the last parcel of land for sale in the core Central area, the land released by such a move would have provided millions of square feet of gross floor area for the expansion of the CBD at a lower cost, he said.

Since construction of the new government headquarters was already underway it was too late to reverse this decision, said Mr Sun. But if the PLA could be persuaded to relocate, the remaining land on the Tamar site, together with the Central Market site now up for sale, would provide enough space to ease CBD congestion and pressure on rents.

The debate on finding room for additional office space was triggered by a surge in Grade-A office rentals in Central to record levels of HK$200 per square foot at AIG Tower.

According to property consultancy Colliers International, average grade-A office net rents in Central are now up by a massive 542 per cent at HK$122 per square foot, from a low of HK$19 per square foot in September 2003. With fresh supply not due until 2011, the vacancy rate in the sector fell to a record low of 0.86 per cent in March before rising fractionally to 1.3 per cent in June.

Simon Lo Wing-fai, a director of research and consultancy at Colliers International, said an area was considered fully let when its vacancy rate stood at 5 per cent.

For both prospective and existing tenants in the area there was no respite in sight, and demand for office space and pressure on CBD rentals was set to escalate, analysts said.

A new driver of demand was added at the weekend with an announcement from the mainland's State-owned Assets Supervision and Administration Commission that large state-owned enterprises may be allowed to locate their headquarters in Hong Kong.

"If Hong Kong does not act promptly, it will be in big trouble if a large number of companies respond to the rising rents by moving elsewhere," said Mr Wong.

Not more than half of the 40 hectare West Kowloon reclamation area has been allocated for hotel, commercial, residential and entertainment use. "The government should exclude the residential use and allocate all of the remaining land for purely commercial use," said Mr Wong, referring to the land not allocated for the cultural hub.

Louis Kau Kin-hing, a senior town planner at West Kowloon Cultural District, said land use for the area would be finalised by the soon-to-be formed West Kowloon Cultural District Authority.

"No final decision on land use has been taken yet, but the government's initial study indicated that West Kowloon could be developed into a new commercial centre," he said.

David Watt, chairman for North Asia at property consultant DTZ, said Hong Kong needed more large-floor-plate office buildings in prime locations in order to maintain its role as a financial hub.

"West Kowloon does have the potential to become an extension of Hong Kong's central business district. It could be a complementary office hub, just as Battery Park was to New York City's downtown area, or Canary Wharf is to the City of London," he said.

Surveyor Tony Tse said the redevelopment of Harbour Building, opposite Sheung Wan MTR station and also on the waterfront, could be a short-term solution to new supply.

"It is wishful thinking to believe in creating a new central business district. We examined the prospects of Kowloon Tong and Tsim Sha Tsui East as possible locations, but found that it would not be feasible," he said without elaborating.

Entrepreneur Allan Zeman, who is the biggest landlord in Lan Kwai Fong, said under-utilised areas along Sheung Wan and Western District's waterfront could be an option. But he believes rental growth will taper off in Central.

"Office rents have slowed down as investment banks and banks are downsizing," he said, in reference to the United States' subprime crisis adding pressure to the office market.

Hong Kong - New office hub to form at South West Kowloon
22 June 2009
DTZ Asia Property Market Update

On 22 May, the Town Planning Board has agreed on the proposed amendments to the South West Kowloon Outline Zoning Plan regarding the 5.88 hectare site at the Guangzhou - Shenzhen - Hong Kong Express Rail Link Terminus in the West Kowloon Reclamation Area. The site will change its development plan from mixed-use (residential, retail and hotel) to business only, in order to provide more grade A office space at a prime spot of the city and to make the best use of its transport connection. The site is bounded by Lin Cheung Road, Austin Road West and Jordan Road, with its plot ratio reduced from 8.88 to 5, allowing about 3.16 million sq ft of potential GFA. There is also a height limit of 115 metres for office towers on the site, to avoid a sharp contrast with the neighbouring medium-rise cultural construction.

However the government expressed that the height limit could be relaxed if there is outstanding design merit in the development proposal of developers when the site is later put up for sale or open tender.

This report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited.

Rail hub to have offices
The Standard
Wednesday, February 10, 2010

MTR Corporation (0066) plans to build three commercial landmarks at the proposed West Kowloon express rail link terminus.

The buildings will cover 3.16 million square feet of gross floor area.

The railway operator has applied to the Town Planning Board to build 2.84 million square feet of offices and over 316,000 sq ft of space for commercial or retail use.

These will connect with the nearby Site B, which will feature 28,150 square meters of public open space and a public transport terminus.

During development research, the board added a clause that frees developers from any height or plot-ratio restrictions, provided that they present creative designs and plans.

At the extreme, builders may erect a single skyscraper instead of a handful of buildings.

But the MTRC proposes to build three 98-meter-high buildings, equal to 21 to 23 stories.

Given their low height, the potential of a "wall effect" will be negligible, market watchers said. Lanbase Surveyors director Nelson Chan Cheong-kit believes the MTRC will not be able to change the height of the buildings easily once the plan is approved.

That is because the railway operator will have to make piling preparations while the station is being built, Chan told Sing Tao Daily, sister publication of The Standard.

With reference to the MTRC's decision not to build skyscrapers in the area, Chan said buildings can be landmarks not just for their heights, but also for their design.

Surveyor Tony Chan Tung-ngok values the site at HK$18.98 billion, and estimates the project will cost HK$6,000 psf of GFA as a whole. The office area can cost up to HK$8,000 psf.

MTR plans for towers at express station rejected
19 March 2010
South China Morning Post

The Planning Department has given the thumbs-down to the MTR Corporation's design plan for office towers above the future high-speed rail terminus in West Kowloon and wants it to present new designs.

The department is asking the Town Planning Board to delay approvals until better designs are produced for the 58,800-square-metre site.

The department's recommendation will be discussed by the Town Planning Board's metro planning committee today.

The MTRC proposal, however, is in line with all major planning requirements. The sticking point for the Planning Department is the design plan for office towers atop the future terminus.

The MTRC plan calls for three high-grade office towers, commercial and retail facilities and at least 8,900 square metres of public open space.

The three office towers would be 17, 18, and 19 storeys tall, with a plot ratio of five.

MTRC says the "stepped" height of the towers would provide a visual transition between the existing tall residential buildings above Kowloon Station and the much lower old dwellings in Yau Ma Tei and Jordan.

But a Planning Department paper tabled to the committee members says the building heights have been "unnecessarily compressed to a rather uniform height ... resulting in an almost flat roofline".

It also says "the three office towers appear as if one single cubiform mass, which results in adverse visual impacts" when viewed from the Star Ferry in Central.

"The Planning Department considers that the [MTRC] should be required to explore means to improve the design ... and devise alternative design options for comparison and assessment."

The department recommended the committee "defer making a decision at this stage pending further information on improvements to the current scheme".

The MTRC considered a two-office-tower option, but that would require restrictions on building height to be relaxed.

In his submission, Yau Tsim Mong district councillor Derek Hung Chiu-wah urges the government to prevent the construction of buildings that give rise to a "wall effect" and "toothpick buildings" that will affect air movement in the area.

A related project to develop public open space and railway-related facilities in a 37,700-square-metre site north of the terminus will also be discussed at today's meeting.

Terminus buries roads to link with district
18 August 2010
SCMP

Pedestrians are a major beneficiary of the MTR Corp's plan for the multibillion-dollar West Kowloon terminus of the Hong Kong-Guangzhou high-speed railway, which it unveiled yesterday and which will go to public tender before the end of the year.

The plan calls for roads that separate the terminus from the West Kowloon Cultural District, such as Austin Road, to be put underground, allowing pedestrians to walk to the cultural district without impediment.

Yet inbound travellers wanting to catch a train to Central will have to walk for about 10 minutes in the open to Kowloon station, although the walk to Austin station for connections elsewhere will take only about two minutes.

A large piazza planted with vegetation will front the western exit and part of it will be designated for public performances.

The MTR's general manager for the high-speed link, Paul Lo Po-hing, said the station would be a landmark.

"It will be a place for people to spend their leisure time, to relax, and to enjoy the green features and open areas with their friends and family," he said.

Most of the 11-hectare terminus, the final stop on a national high-speed rail network that will extend to Beijing, Shanghai and beyond, will be underground. It will rise about 15 metres above ground - about five floors of a residential building - with four of its five storeys burrowing 20 metres below ground.

The building will form an archway over which pedestrians will be able to walk. The highest point will provide a view across the cultural district.

Lo said that as well as glass ceilings, which will allow sunlight to penetrate two floors underground, the terminus would use other energy-saving features, such as seawater cooling plants for air conditioning and a rainwater harvesting system.

Preparatory work on the station, which began in January, precedes work on the West Kowloon Cultural District, plans for which will be released on Friday. But an MTR spokeswoman said the terminus design factored in flexibility for future integration with the cultural district.

Options were available in the terminus and Austin station for possible subways linking to other buildings, while space had been set aside to allow mainland and Hong Kong immigration clearances to be carried out on the same floor.

Yau Tsim Mong District Council chairman Edmond Chung Kong-mo said the design was better than he had expected.

"The terminus looks bright and spacious, and the greening features extend all the way to Yau Ma Tei," he said. "I think residents in the neighbourhood will welcome it."

About three hectares of the public space around the terminus will be covered in vegetation.

However, it is not known whether the public will be allowed to walk on the grass.

An engineer opposed to the project, Civic Party member Albert Lai Kwong-tak, said there was still much concern in the community about the connection between the terminus and its neighbourhood.