High-profile acquisitions boost prime office space
Investment demand for grade A office space is heating up and will replace luxury residential property as the best performing real estate segment in the coming year, according to analysts.
Adrian Ngan, property analyst at BNP Paribas Peregrine Securities, projects a 33 per cent increase in grade A office capital values and a 44 per cent rise in rentals over the next 12 to 18 months.
Grade A office prices have jumped 50 per cent from a low posted in October last year. Luxury residential properties have risen 100 per cent in the same period.
'There's more upside to come in the rental and capital values of Grade A office properties, given the very favourable supply and demand picture,' Mr Ngan said.
BNP Paribas Peregrine has revised valuations for Great Eagle's Citibank Plaza up by 32 per cent, to $10,300 per square foot, translating into a net asset value for Great Eagle of $33.93 per share. The brokerage now values office space in Mongkok's Langham Place at $5,000 per sq ft, up from the previous $3,600 per sq ft.
The higher valuations are being driven by high-profile acquisitions of grade A space, especially in Central. Henderson Land Development chairman Lee Shau-kee's family trust, for example, reportedly bought four office floors at 9 Queen's Road Central from Australian fund Lend Lease Real Estate for about $510 million.
Colliers International research and consultancy director Simon Lo expects more big transactions would be closed in the near term.
