The bank's current headquarters are at 12 Queen's Road Central.

The office investment market entered a consolidation stage in the second quarter after prices in core business areas doubled between October last year and February this year.

Although the bank was willing to pay a high price for the office building, property agents say other investors may not re-enter the office market due to the uncertain outlook. Office prices have dropped 20 per cent from their peak early this year.

Desmond Poon Chi-ming, an associate director at Chartersince Surveyors, said the market recorded only one confirmed grade A office transaction in Admiralty last month, compared with 51 and 68 deals recorded in October and November last year, respectively.

'Grade A office prices in Admiralty [back then] doubled in a few months. It was the strongest growth in office prices I have ever seen,' Mr Poon said.

'The outlook for the office market turned uncertain in the second quarter. And banks also tightened loans to investors, making them adopt a wait-and-see attitude to the market.'

He said the CNAC Building sale proved that property in prime locations could still attract buyers willing to pay high prices.

Mr Poon believed it would encourage owners of office properties to stand firm on their asking prices even though sales transactions might decline further.

He expected investors would not re-enter the market until owners cut asking prices 10 per cent to 20 per cent, if market sentiment did not change.

Kent Fong Chi-kit, the head of the investment department at DTZ Hong Kong, the buyer's representative, said the bank was willing to buy the building as entire office buildings with retail space in core Central were rarely available in the market, particularly a building next to a bank's headquarters.

David Kwok Sek-chi, the managing director of Shanghai Commercial, yesterday said the bank might consider redeveloping the two buildings when the existing leases at CNAC Building expired in 2011.

'We need more office space to expand and prepare for our future development,' Mr Kwok said.

Mr Fong said the bank could also generate extra gross floor area through redevelopment as the plot ratio of its existing 14-storey headquarters was not fully utilised.

The 26-year-old CNAC Building has a gross floor area of 69,981 square feet. The annual rental income of the building reached HK$2.6 million, meaning the buyer could receive a rental yield of 2.25 per cent.

CNAC bought the building in 1994 for about HK$430 million and generated more than HK$958 million from the sale.

Banks such as Morgan Stanley have chosen to lease office floors at International Commerce Centre in non-core business areas for expansion. However, Shanghai Commercial and China Construction Bank have chosen to stay in Central.

Mr Kwok said the bank had offices outside Central but not all of the departments could move from Central. 'The sales department and management have to stay in Central for business,' he said.