Property

Turn The Spotlight On Kowloon East

Turn The Spotlight On Kowloon EastSo maybe West Kowloon is a little too barren for your tastes. That’s an entirely reasonable stance given the area’s single significant office tower (ICC) and the distance (relatively speaking) from any street-level amenities. With the invigorating West Kowloon Cultural District years away, all efforts have seemed to focus on Kowloon East and its wealth of convertible industrial space, existing neighbourhoods and easily expanded transport links — holdovers from when Kai Tak still took air passengers. Kowloon East sits on one of Hong Kong’s oldest and simultaneously youngest areas.

Rapid Regeneration

Kowloon East is officially part of Kwun Tong and includes Ngau Tau Kok, Kwun Tong Town Centre, Shun Lee, Sau Mau Ping, Lam Tin and Yau Tong. It is one of the most densely populated areas in Hong Kong, and with the buildings along Kwun Tong and Ngau Tau Kok Roads slated for redevelopment, its life as a bustling so-called CBD2 seems imminent. Sun Hung Kai Properties’ Millennium City was first on the scene, and since it opened the project has attracted tenants like Standard Chartered and the Hong Kong International Film Festival. Landmark East has joined it in the area, and Manulife announced plans to buy Wheelock’s One Bay East. And then there’s the new cruise terminal.

On the residential front, the bulk of homes in Kowloon East are public housing, but that’s likely to change if business keeps moving into the district, which is likely, given Central’s high rents. There are already over 600,000 people in Kwun Tong, and it has the services and infrastructure to go with that, even as they continue to expand. There are already dozens, if not hundreds, of schools Kwun Tong including Delia School, and several special needs secondary schools. Ronald Lu & Partners designed the new public swimming pool complex, set for completion in 2014. SHKP launched serviced apartments, the Vega Suites in Tseung Kwan O a little farther down the road, and a Crowne Plaza and Holiday Inn are already operating. Kowloon East is looking good, particularly given the government’s stated commitment to adding 10 million square feet of office space to the landscape at Kai Tak alone.

“[The] Kai Tak Development is a huge and highly complex development project spanning a total planning area of over 320 hectares covering the ex-airport site together with the adjoining hinterland districts of Kowloon City, Wong Tai Sin and Kwun Tong. After thorough planning and public participation process, the finalised scheme of KTD with a mix of community, housing, business, tourism and infrastructural uses was proposed,” says the Civil Engineering and Development Department on its website. Good thing, because a lot of people are counting on it.

East vs West

“The market has doubts on the development of the West Kowloon Cultural District considering the government’s slow moving approach on many key decisions and the delay of the high-speed rail construction. The development timeframe remains uncertain,” says Joanne Lee, Manager, Research and Advisory at Colliers International when comparing the investment prospects for the two Kowloons.

“For Kowloon East, it’s a long-term plan and it will take at least a decade to be fully established. The development of CBD2 (Kwun Tong, Kowloon Bay and Kai Tak districts), its all-encompassing plan will provide Hong Kong with a larger platform for its commercial city landscapes and provides a long-term solution to its current lack of space. There is a vast amount of space to be freed up for both local and international businesses to expand in Hong Kong,” she explains. If it all comes together, Lee theorises that, “CBD2 should be able to facilitate business in the best possible way by providing a wide variety of quality hotels, residential properties, Grade A offices, retail outlets and a variety of transportation nodes.”

According to research by Knight Frank, 30 percent of the SAR’s premium office stock is over 30 years old, and almost 60 percent of Central’s is over 25. If nothing else, Kowloon East will be the place to go for modern offices and sure enough roughly 2 million square feet of new office space will materialise in Kowloon East this year. Whether that makes Kowloon East a better investment is anybody’s guess, but that many workers usually need someplace to live — particularly imported staff with blue chip tenants. Knight Frank is optimistic about the area’s future, but it’s also cautious. “Upon completion, CBD2 could provide a maximum office space of 42.6 million square feet. Under current proposals, the Kai Tak area could deliver over seven million square feet of Grade-A office space before 2021, based on the government’s timetable,” said its Road to Regaining Balance? 2020 office market report. Delays, public consultations and a slowdown in infrastructure works could all impact the area’s progress. “We therefore anticipate that only a part of the office space planned in Kai Tak will likely be delivered by 2020, plus some contribution generated by the revitalisation of older areas. We estimate that the total new supply of prime office space in Kowloon East CBD2 will be around three million square foot by 2020.”

Ultimately in a race, Kowloon East continues to pull ahead despite a lack of high-end residences (for now). “We do not expect [West Kowloon] prime office space to be delivered onto the market until after 2020,” finished Knight Frank. Looks like everyone in The Arch could be commuting to the East to work.