US banking group Citi will spend HK$5.42 billion on a new building in East Kowloon that will become the hub for its 4,500 staff scattered around the city, in the largest single-office transaction in Hong Kong.
The deal eclipsed the mark set by Agricultural Bank of China with its HK$4.88 billion purchase of 50 Connaught Road Central in 2012. The Citi building is being built by Wheelock Properties and the whole block of Grade A office space is named One Bay East - East Tower. It would be completed next year, with 21 floors and a total gross floor area of 512,000 square feet, the lender said yesterday.
"This is one of the greatest milestones of our 112 years of history in Hong Kong," Weber Lo, the country officer and chief executive for Hong Kong and Macau, told the South China Morning Post. "This strategic investment of a Citi-owned office property is a testament of our commitment to the future of Hong Kong, and our determination to furthering our franchise in this priority market of Citi."
Stephen Bird, chief executive for Citi Asia Pacific, said the move was "in line with our global strategy to consolidate our operations in priority markets".
In Hong Kong, Citi has so far leased several offices and owned only a few branches. Aside from a Central branch, its other offices include Citibank Plaza in Garden Road and premises in Quarry Bay.
Lo said the deal supported efforts to transform Kowloon East - comprising Kai Tak, Kowloon Bay and Kwun Tong - into another core business district.
Joseph Tong, executive director of Sun Hung Kai Financial, said the deal underlined the difficulty in securing ample office space in Central.
"It is not just the expensive rent. Even if companies can afford to pay, many companies cannot find adequate office space in Central to house all their staff," Tong said. "Consolidating all staff into one building would enhance operational efficiency."
Citi's neighbour will be insurer Manulife (International).
Wheelock chairman Stewart Leung Chi-kin had said more than eight parties were in talks to buy One Bay East, which is in Hoi Bun Road. Wheelock Properties is a wholly owned unit of Hong Kong-listed Wheelock & Co.