McDonald’s sells Hong Kong shop for US$15.3 million as ‘old money’ returns to retail

As “long-dormant old money” steps back into Hong Kong’s retail property market, McDonald’s has sold the property housing its first New Territories restaurant for HK$120 million (US$15.3 million), extending its year-long sell-down of self-owned shops.

The property at 10-22 Tsuen Wan Market Street, spanning the ground floor to the second floor, was sold to Keen Charm Holdings (HK) Limited, with the agreement for sale signed on August 31, according to the Land Registry.

Company Registry listed Ngan Chi-hung, Ngan Chi-wai and Ngan Tuet-ching as directors of the purchasing vehicle.

They are reportedly identified as family members behind a Hong Kong toy manufacturer, May Cheong Group. The family-owned company was founded in 1967 in a small factory in Hong Kong by P.Y. Ngan and Y.C. Ngan, according to its website. The group did not respond to a request for comment.

Land Registry records show McDonald’s Restaurants (Hong Kong) Limited bought the property for HK$8 million in 1987, giving the company a HK$112 million gain, or a 14-fold return, on the sale.

Shop values in Hong Kong have come under pressure in recent years as the pandemic and shifts in consumer spending have weighed on retail demand, particularly in traditional shopping areas.

Eunice Tang, executive director of capital markets at JLL, which is marketing some of the McDonald’s shops, said the sales had attracted interest from “long-dormant old money” and “high-net-worth buyers” seeking prime retail properties backed by blue-chip tenants.

“[The interest] is driven largely by the shops’ reputable tenants and extended lease commitments,” Tang said.

The restaurant opened in 1978 as the first McDonald’s outlet in the New Territories and the chain’s 11th in Hong Kong. McDonald’s now operates 11 outlets in Tsuen Wan. It will continue operating from the property under a 20-year lease that runs through December 2036, according to the Land Registry.

The sale comes as McDonald’s continues to monetise properties accumulated over decades of expansion. The company initially planned to sell all 23 of its self-owned shops in Hong Kong, with the portfolio valued at about HK$3 billion.

Since launching the disposal programme in July last year, it has sold at least 13 properties for about HK$1.2 billion, including the latest Tsuen Wan transaction, according to South China Morning Post calculations and Land Registry records.

The sales come as transactions for retail properties valued above HK$50 million have remained sluggish in Hong Kong. Industry representatives have estimated that shop mortgage lending has fallen to about 20 per cent of its peak. Landlords have said banks are increasingly reluctant to lend against retail properties, leaving potential buyers unable to secure financing.