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Hong Kong Investor Secures USD30.2M Profit on Retail Property Amid Market Softness
A long-term Hong Kong investor realized a nearly USD30.2 million profit from the sale of prime Tsim Sha Tsui retail properties, despite accepting a 40% discount from the original asking price. The transaction highlights the potential for significant…
Four-Decade Holdings Yield Significant Returns
A veteran Hong Kong investor recently divested a portfolio of Tsim Sha Tsui street shops, held for over 40 years, securing a profit of nearly USD30.2 million. This return was achieved despite a final sale price more than 40% below the initial asking figure, against a backdrop of rising interest rates and a subdued retail property sector.
Land Registry data shows the retail shops, located in the Cheung Lee Commercial Building and the Wing Lee Building on Kimberley Road, sold for USD32.3 million. The seller, Ng Kan-hoi, a low-profile investor, had initially listed these assets for a combined USD54.3 million before reducing the price.
Ng acquired the properties between 1979 and 1987 for a total of USD2.5 million. This period coincided with heightened Sino-British negotiations regarding Hong Kong's sovereignty and a stock market downturn that depressed property values. After holding these assets for over four decades, Ng’s gain represents an almost 12-fold return on the original investment.
Market Dynamics and Portfolio Valuation
Edwin Lee, founder and CEO of Bridgeway Prime Shop Fund Management, observed that the transaction involved a large portfolio, contributing to a substantial total value. However, the price per square foot was comparatively low, a consequence of the challenge in finding a single buyer for the entire package. Lee noted, "When the market was booming, you might not have been able to buy these retail shops even for USD76.2 million or USD88.9 million."
The sold properties in Cheung Lee Commercial Building included the basement, ground, first, and second floors, spanning approximately 21,871 square feet. Since May of last year, the first and second floors have been leased to Lin Heung Tea House for about USD31,600 per month, translating to roughly USD2.90 per square foot. Lok Tin Cafe occupies the ground floor, while mainland Chinese karaoke chain Mei KTV leases the basement. These specific assets collectively sold for USD25.6 million, equating to about USD1,170 per square foot.
Additionally, Shops 6-10 on the ground floor of Wing Lee Building, totaling around 2,731 square feet, were sold for USD6.8 million, reflecting a price of approximately USD2,490 per square foot. These units are currently leased to a noodles restaurant.
Recent Disposals and Market Context
Ng Kan-hoi reportedly owns more than a dozen commercial properties in Tsim Sha Tsui, including assets on Cameron Road and at Haiphong Mansion. This recent sale is Ng's second significant disposal in recent months.
In June, Ng sold the entire ninth floor of the Far East Finance Centre in Admiralty for approximately USD20.9 million. Despite holding that property for 18 years and reducing its asking price by as much as 38%, the profit realized was about USD1.4 million, or roughly 7%.
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