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Office sale set to end a trend


ITOCHU'S sale of its 30 per cent stake in the Dah Sing Financial Centre this week was a surprise.

Just when everyone thought the office selling spree in Hongkong by Japanese companies was over, another deal was struck.

Japanese firms staged a massive, reluctant withdrawal from Hongkong last year, selling more than $4 billion worth of office space.

The volume of selling was so substantial that capital values would probably have suffered had the mainland Chinese not stepped in in a big way, in the process stealing Japan's crown as the largest overseas real estate investor in the territory.

It was thought that the Japanese had finished repatriating funds to cope with the financial crisis at home.

Itochu, formerly C. Itoh and Japan's largest trading company, has not revealed the reason for the sale.

But the $306.1 million deal begs the question: are there more sales to come? The answer is probably no.

Japanese investments in the territory's property have been among their most lucrative in the world.

But when they needed cash, they had little choice but to sell. Hongkong was not only a profitable market but also one where buyers remained active.

A return of the Japanese institutions may still be a long way off, but there has been a fair bit of interest of late in Hongkong and China property from smaller individual company buyers.