One of the best-kept secrets in commercial real estate, Tsuen Wan is ripe for investment.
Located on a bay in the New Territories, and served by its eponymous MTR line, Tsuen Wan was once a market town surrounded by sleepy villages, before it was transformed into a New Town in the 1950s. In the 1960s, the Hong Kong Government began building housing estates such as Fuk Loi Estate, which housed close to 400,000 residents. In subsequent years, six more housing estates were built, and private developments such as Allway Gardens, and more recently City Point and Discovery Park followed. Since 2006, close to 5,000 new residential units have been built, and another 4,000 new residential units are expected to come into the market within the next four years.
Attractions for tourists and visitors
Cultural sites such as a 200-year old walled Hakka village museum, Yuen Tsuen Ancient Trail and Western Monastery are big draws for tourists visiting Hong Kong, whose choice of accommodation includes the Panda Hotel, a 1,600 room five-star hotel within the Nina Tower mega-development, and the recently opened 547 room Dorsett Tsuen Wan within the district.
Economic support from middle class families
In all of the New Territories, residents of Tsuen Wan enjoy the second highest household incomes after Sai Kung. Some of the newer residential estates such as The Dynasty and Vision City have been transacting at $14-15,000 per square foot of saleable area. At this price level, such properties have attracted a growing number of new middle class families. This burgeoning middle class is eager for a wider variety of goods and services, and malls such as Discovery Park, Tsuen Wan City Landmark, Citywalk and Tsuen Wan Plaza have no lack of footfall.
Retail investment ripe with opportunity
But because the retail environment here is not as dense as it is in many of Hong Kong’s prime commercial and shopping districts, residents as well as tourists and day-trippers from other parts of Hong Kong are still hungry for a more expansive and diverse retail experience. This means that new shops and business ventures within the district have a promising chance at long-term success.
In the last 10 years, Tsuen Wan has risen to become the core retail district for the North West New Territories, offering commercial real estate investors sensible opportunities outside of Hong Kong Island and Kowloon. Many blue-chip retailers such as H&M, Zara, Uniqlo, as well as high street Korean brand SPAO and its sister home decor store Modern House, have already made their home here. Along with a solid reputation as a good destination for local food, a handful of good Korean restaurants have arrived on the scene to add even more flavour to an already well-known foodie hot spot.
And what about commercial properties?
At present, commercial real estate transactions are few and far between, because there are a very limited number of commercial buildings, mostly owned by large developers or institutions here. In the last five years, large commercial assets such as 118 Chuen Lung Street, 55 Chung On Street, and Riviera Plaza, have been snapped up quickly, selling at more than HK$500 million each. Riviera Plaza, which was sold in a public auction, attracted numerous tender bids. Since 2012, investors have been seeking similar opportunities, but as yet, none have been available.
It's only up from here...
Industry insiders predict that Tsuen Wan will likely follow a path similar to neighbourhoods such as Kennedy Town or Sai Ying Pun in Hong Kong’s Western District, attracting more mid-to-long term investment. With the district’s catchment, disposable income and average household income expected to increase in the coming years, smart investors will certainly benefit from keeping an eye out for commercial space on On Street, Sha Tsui Road or Tai Ho Road, or even an en-bloc commercial building if available.