More China investors to buy HK office buildings in 2016

HONG KONG (Feb 16): Hong Kong is expected to see more China investors acquiring office buildings in 2016, according to global commercial real estate services company Cushman & Wakefield.

The firm revealed in its 4Q2015 Hong Kong Investment Snapshot report that China companies will continue to show interest in acquiring office premises in Hong Kong.

“We have seen more China companies buying premises in Hong Kong in 2015. The most significant transactions were Mass Mutual Tower and One Harbour Gate West Tower,” the report read.

Mass Mutual Tower was sold to Evergrande Real Estate Group for HK$12.5 billion (RM6.69 billion). It is also the largest en-bloc office acquisition and the highest unit rate ever achieved in a Hong Kong office investment.

Meanwhile, One Harbour Gate West Tower was sold to China Life Insurance for HK$5.85 billion to serve as the headquarters for its offshore subsidiary.

“Looking ahead into 2016, mainland companies will continue to show interest in acquiring offices. However, most of the Grade A offices are owned by locals who are unlikely to offload assets in core areas. Hence, it is expected mainland companies will remain confined to purchasing assets in non-core areas,” the firm said.

Apart from that, Cushman & Wakefield also foresees better performance on non-traditional/suburban shopping districts on the back of expected stronger local spending power in the coming year.

“Moving forward into 2016, as tourism arrivals and retail sales would continue their present downward trend, the prospect for retail properties in traditional shopping districts is not expected to brighten significantly. Hence, landlords must slash their prices to close deals.

“Meanwhile, as supported by robust local spending, the non-traditional, or suburban, shopping districts will continue to thrive.”