The Standard 英文虎報  P05  |   Top News  |   By Imogene Wong  |   2015-11-19

Retail doldrums bring fund sell on top shops

A number of collective investment funds, seeking to raise HK$1 billion to buy 20 prime-location shops in Hong Kong and London, has been launched by Bridgeway Prime Shop Fund Group, set up by veteran investor Edwin Lee Kan-hing. The scheme, similar to private equity funds, only welcomes professional investors with liquid assets of more than HK$8 million. It promises investors returns of more than 30 percent in three to five years.

Lee, the 40-year-old founder, said prime retail shops are niche investments, with the average value of a transaction in Hong Kong at about HK$30 million. Gaining entry to the funds only requires HK$1 million. 

The company will only invest in ground-level retail shops. Investment in the funds will be for between three and more than 10 years. Lee said future supply of prime new shops is very limited as redevelopment projects in Hong Kong will involve new shops being in the hands of big developers, which are likely to hold these assets for the long term instead of selling them. He said a retail shop can be sold for up to 1.5 times its market value if it is acquired for redevelopment purposes.

``Shops will not depreciate over time or become `haunted' ... In the long run, owning a shop is usually profitable,'' he said, adding that prospects for retail shops in West Island, Wan Chai, Jordan, Kowloon City and Tsuen Wan look promising.

Lee said prime shops today can be acquired at prices as much as 30 percent lower than average market levels. With some buyers armed with ample cash, sale and purchase transactions can be done quickly.He said the rate of return in 100 recent retail shop transactions in Hong Kong reached 17 percent. Next year, prices of retail shop premises in major streets in prime locations, like Causeway Bay, may see price drops of another 30 percent, he said. Lee added that he scooped profits in all 40 retail shop deals that he made between 2009 and this year.

 His company, he said, has already acquired three licenses from the Securities and Futures Commission, as collective investment schemes are illegal without a license. His wife, Rita Pang Yat- sum, formerly a legal counsel at Citigroup, is co- founder and legal counsel of the company.

Each shop is to be put in a fund that will have no more than 50 investors. Investors can expect to receive dividends regularly, with Lee also investing in the funds. His firm will find a partner to invest in retail shops in London.