WEST KOWLOON


 


Deutsche moves to West Kowloon
German bank joins Credit Suisse and Morgan Stanley at the ICC building in Hong Kong's West Kowloon district

Hong Kong’s Central district is slowly losing its bankers. The latest defector is Deutsche Bank, which will be joining Morgan Stanley and Credit Suisse at the International Commerce Centre (ICC) across the harbour in West Kowloon.

Deutsche Bank announced yesterday that it has signed an agreement to lease up to 18 floors in the ICC and will move its entire bank – all divisions, management and support functions – to the building in 2010. This will help it allow for an anticipated staff expansion from its current 1,500 to up to 4,000, and enable it to put everyone into one building.

It plans to start moving staff into the ICC in the third quarter of 2010, occupying an initial 12 floors. Deutsche Bank’s overall space commitment and expansion options total 62,000 square metres in the new ICC A-Grade commercial development, which is billed as one of the most environmentally advanced in Hong Kong.

Hong Kong’s Central district is slowly losing its bankers. The latest defector is Deutsche Bank, which will be joining Morgan Stanley and Credit Suisse at the International Commerce Centre (ICC) across the harbour in West Kowloon.

Deutsche Bank announced yesterday that it has signed an agreement to lease up to 18 floors in the ICC and will move its entire bank – all divisions, management and support functions – to the building in 2010. This will help it allow for an anticipated staff expansion from its current 1,500 to up to 4,000, and enable it to put everyone into one building.

It plans to start moving staff into the ICC in the third quarter of 2010, occupying an initial 12 floors. Deutsche Bank’s overall space commitment and expansion options total 62,000 square metres in the new ICC A-Grade commercial development, which is billed as one of the most environmentally advanced in Hong Kong.
   - 2008 May 7   FINANCE ASIA

Credit Suisse moves to West Kowloon
The firm will take 10 floors in the International Commerce Centre early next year

If you were wondering who was next in line to join Morgan Stanley in West Kowloon, the answer is Credit Suisse. The firm plans to cross Hong Kong harbour and move its entire Hong Kong operations to the International Commerce Centre (ICC) building in West Kowloon by 2011. Morgan Stanley announced in August that it will lease 10 floors in the same building.

Credit Suisse will initially occupy the top 10 office floors of the ICC  including a client reception suite on the lucky-numbered 88th floor – in the very top zone, totalling 300,000 sq ft. The new facility, which will result in Credit Suisse's office space expanding by 40% in Hong Kong, will have a capacity for over 2,000 employees. The bank will start moving staff to the ICC during the second half of 2008 – although the 118-storey tower isn’t expected to be completed until 2010.

West Kowloon is across Victoria Harbour from Central, which is on Hong Kong island. At the moment, most investment banks are located in Central or neighbouring Admiralty – however with Morgan Stanley and Credit Suisse’s announced move, that balance is changing.

"We are delighted to be announcing this move to the ICC. Hong Kong is very important to us and this tenancy agreement underscores our commitment to the long-term growth of our Hong Kong businesses,” says Paul Calello, who was promoted to New York as CEO last February but is still also acting as CEO of Credit Suisse Asia-Pacific.

The ICC building is being developed by Sun Hung Kai Properties and will boast around 35 restaurants, cafes and bars and the shopping mall planned for the building will be around 25% bigger than the mall in IFC2. A gym is planned for the building, an ice rink, and a 12-screen cinema. Out-of-towners may end up booking into the trendy W Hotel, or in the Ritz-Carlton, which will be at the top of the ICC, thus making it the world's highest hotel.

Aside from the shopping and dining aspect, Credit Suisse took a unique, very politically correct in its pitch regarding the upsides of moving into the new building. In its press release announcing the move, the firm underscored that it will introduce technology into the ICC to reduce energy consumption. At ICC, Credit Suisse will become the first office worldwide to introduce “thinclient” computer terminals for all of its staff, which will eliminate the need for each employee to have an individual personal computer, and instead all terminals will be linked directly to virtual desktop images running on remote servers that will be housed outside the ICC. The bank forecasts that should help reduce power consumption by 20%.

Now, if the bank can manage to convince its staff to walk up 88 flights of stairs rather than use the elevators, it will not only save energy, it will also have a super fit team of bankers.   - 2007 December 6   ASIA FINANCE

ICC's low rents lure financiers over the harbour

Another investment bank has been drawn away from Central to International Commerce Centre in West Kowloon - a move analysts believe will trigger even more financial houses to go across the harbor because of more attractive rents there.

ICC's developer Sun Hung Kai Properties (0016) and Credit Suisse said the bank will take up the top 10 floors of the office tower atop MTR Kowloon station.

Credit Suisse will take up some 300,000 square feet, an expansion of the bank's Hong Kong office by 40 percent to house a 2,000-strong staff.

Support departments will move from Exchange Square to the ICC in the second half of next year. The relocation will be completed by 2011.

ICC has signed leases for 60 percent of the building's 2.5 million sq ft total floor area, said Victor Lui Ting, Sun Hung Kai Real Estate Agency managing director.

Credit Suisse followed Morgan Stanley, who signed a lease for 350,000 sq ft in the lower floors of what would be Hong Kong's tallest building.

"Because of successful leasing results, we will raise rents in phase 2 by 10 percent from the current HK$42 psf," Lui said.

DTZ Debenham Tie Leung business space director Alan Yuen Chun-yin expects more companies to relocate to ICC. The firm is currently talking to a few major financial institutions.

Despite the rent hike, Yuen said it is still attractive compared to Central.

ICC and International Finance Centre in Central have been built according to the same specifications. Both have been co-developed by SHKP.

According to Jones Lang LaSalle, prime offices rentals in Central rose 6.7 percent last quarter, chalking up a 21 percent surge so far this year.

Spot rents in IFC and Exchange Square hit HK$176 per sq ft, and HK$120 psf respectively.

Financial firms like Morgan Stanley and Credit Suisse have offices scattered around Central. It is impossible to get all their staff under one roof in the core business area due to a lack of space.

"As vacancy rates in Central dive below 2 percent, ICC represents a very good alternative for major tenants keen to expand and consolidate," said Chris Marriott, deputy managing director and head of leasing at Savills Hong Kong.

But analysts had mixed reactions as to whether ICC will make an impact on rents in Central. Lehman brothers said ICC and One Island East in Quarry Bay coming on stream will create a cap for Central rents, while Yuen and Marriott said the effect would be small and gradual.

Lui expects the pace of rent hikes in Central to ease by about 10 percent next year. -   2007 December 6    THE STANDARD

Morgan Stanley moves to West Kowloon  
The investment bank rents 10 floors in the soon to be third tallest building in the world, the ICC in Hong Kong's West Kowloon district.

Morgan Stanley has announced that it will lease 10 floors in the International Commerce Centre (ICC), making it the first investment bank to cross Hong Kong harbour and open offices in West Kowloon.

It expects to relocate its entire staff of roughly 1,500 people working in Hong Kong (which is where its Asia-Pacific headquarters are based) at the end of 2008.

"We have had positive experience in being among the first banks that moved into newly developing business locations, such as midtown in New York and Canary Wharf in London," says Hans Schuettler, Asia CEO of Morgan Stanley, adding: "What initially always seems a world apart in a few weeks proves to be the right step."

If you don't know your way around Hong Kong, here's the quick low-down.   West Kowloon is across Victoria Harbour from Central, which is on Hong Kong island. Most investment banks are located in Central or neighbouring Admiralty. While a huge percentage of Hong Kongers regularly commute more than an hour to work, taking ferries, buses and trains, many others“ particularly white-collar workers in Central and Admiralty“ never leave the island.

Now the lure“ at least to the ICC building  is undeniable. The ICC, which is being developed by Sun Hung Kai Properties, is currently only half of its planned height of 118 storeys. But you already can’t miss it. And even if you don't end up working in the tower, chances are you'll visit it. It will boast around 35 restaurants, cafes and bars and the shopping mall planned for the building will be around 25% bigger than the mall in IFC2. A gym is planned for the building, an ice rink, and a 12-screen cinema. Out-of-towners may end up booking into the trendy W Hotel, or in the Ritz-Carlton, which will be at the top of the ICC, thus making it the world's highest hotel.

But you may also end up working in the building. Banks, after all, have to consider West Kowloon. For one, there’s cost. Grade-A office space in Central averaged HK$91.04 per square foot for the month of May, but that includes the rent of some of the smaller, never-meant for a bank, space still scattered about district. According to the South China Morning Post, Morgan Stanley's relocation cuts the bank's rent by HK$4.5 million a month to about HK$10.5 million, although Morgan Stanley officials declined to comment.

But more important, there's simply no room left in Central and Admiralty. Morgan Stanley, for example, has nearly doubled its headcount from five years ago. As a result, it has been occupying office space in five buildings across Hong Kong. The move to the ICC building enables it to consolidate everyone in one spot.

Given that the average vacancy rate for grade-A office space was down to 4.05% in May, from 4.53% in February, while most banks are still hiring more people, the space crunch is real.

Now with Morgan Stanley moving out of Central the occupancy rate is somewhat alleviated “ surely someone will be keen to take its space in Three Exchange Square. Several bankers, off the record, joked that they're loathe to move off Hong Kong island - they'll just wait for other banks to move, and thus make more room in Central and Admiralty.

But who else might join Morgan Stanley in West Kowloon? While no one is raising a hand just yet, most bankers will tell you that they are going to have to at least consider the ICC. As one banker said: "you find someone who says, we're not looking or we're happy with what we have, either they have no growth plan or they are lying."

"We're obviously going to have to look at what they're offering over there," says Sim S Lim, Citi country officer, Hong Kong.  "Kowloon is only five minutes away, if the price ends up being one-third or one-fourth of what it is here, you have to start looking at that."

"We'll look over there.  Y you have to, it's allegedly going to be 40% cheaper. You can't ignore that," says Barclays chairman and CEO Asia-Pacific, Robert Morrice.

Meanwhile, as first movers, Morgan Stanley got to make a splash. The signing ceremony included Raymond Kwok, vice chairman and managing director of Sun Hung Kai Real Estate Agency, and Schuettler of Morgan Stanley.   Both wore corsages (and removed them as early as possible), and clinked flutes of champagne after they signed the ceremonial lease agreement at 3pm before a room full of reporters at the Four Seasons hotel. In a case of advertising you couldn’t pay for, Kwok began by saying, "As all of you know, Morgan Stanley is the best investment bank worldwide...".    With comments like that, it may well be worth leading the way across the water." 
- 2007 August 9    FINANCE ASIA

SHKP $5.56b wins West Kowloon site
Sun Hung Kai Properties (0016) bagged a prime seaview site in West Kowloon for HK$5.56 billion as it threw caution to the wind amid sluggish bidding from developers concerned about the high reserve price and the prospect of a judicial review related to the site.

The price was 32 percent above the opening bid of HK$4.2 billion, but was at the lower end of market estimates.

This was despite the Hoi Fai Road site offering a sea view, unlike another West Kowloon site, at Yan Cheung Road, which sold last month for HK$4 billion or 54 percent above the opening bid.

In terms of accommodation value the Hoi Fai Road site, which was triggered for auction last month by Wheelock Properties (0049), stood at HK$6,066 per square foot, lower than the Yan Cheung Road site at HK$6,147 psf.

An SHKP spokeswoman confirmed it had won the site as sole bidder but could not offer details such as the total investment required.

Developers had mixed views of the final bid, with Peter Woo Kwong-ching, chairman of Wheelock Properties (0049), saying it was a good market price, while Cheung Kong (Holdings) (0001) deputy chairman Victor Li Tzar- kuoi commenting that it was quite high.

"The price is within expectation, although maybe at the lower range," said auctioneer Chris Mills, the Lands Department assistant director.

He declined to comment on whether a judicial review application filed Monday by a Sham Shui Po resident had affected the sentiment of developers. The writ accuses the Town Planning Board and Lands Department of not following guidelines to promote health and welfare during planning and urged the rezoning of the plot.

"Bidders would have factored it in the bids if they saw any justifications or risks attached because of the judicial review," Mills said.

The Lands Department also warned potential bidders before the auction that the Town Planning Board had received an application to lower the plot ratio for the domestic portion from 6.5 to 5 and to impose a height restriction on part of the site to allow better ventilation.

The plot, sandwiched between One Silversea and The Long Beach, has a site area of 122,204 sq ft and provides a total gross floor area of 916,522 sq ft, of which 794,319 sq ft is residential.

"The result ... was at the lower end of market expectations, mainly due to the recent legal issues," said Tony Chan Tung-ngok, executive director at Vigers Appraisal and Consulting.

Centaline Property Agency research department associate director Wong Leung-sing reckoned the opening bid price was already very high, with reference to existing secondary market prices in the area.

"They are already very brave to go to this [final] price," said Wong, noting the very tight site, limited seaview and the possible judicial review.

Midland Surveyors director Alvin Lam Tsz-pun said the final price was about right as it was similar in accommodation value to the Yan Cheung site.

Lam noted it was 11 percent higher than two inland West Kowloon sites sold in September 2005 at an accommodation value of about HK$5,400 psf.

Midland Realty sales director for Kowloon Jeffrey Wai Man-chun said the accommodation value of HK$6,066 psf was about 20 to 30 percent higher than prevailing secondary market prices at Olympic station and would allow prices in West Kowloon to consolidate.

Wai believes SHKP could sell the units at between HK$9,000 and HK$10,000 psf.

Cheung Kong deputy chief manager for sales Francis Wong See-chung said Tuesday, in expectation of a good auction result, the developer would revise upwards its indicative selling price for the initial batch of units for its upscale Celestial Heights project at Ho Man Tin from HK$13,000 psf to more than HK$14,000. The project is awaiting pre-sale approval.    - 2007 June 13   THE STANDARD

 


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