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Peggy Sito

Purchase by listed fund likely to be announced in weeks
Speymill Macau Property, a real estate fund listed on London's Alternative Investment Market, is in  the final stages  of acquiring AIA Tower in Macau from  United States  investment bank Morgan Stanley for nearly HK$1.3 billion, according to sources.
The planned purchase   comes less than two weeks after the fund agreed to pay HK$1.02 billion for a Macau residential property, reflecting its confidence in the city's property market  that was  shaken recently by a major corruption trial involving a government official.
Speymill,  headed by veteran Hong Kong property analyst Peter Churchouse, was expected to announce a deal to buy AIA Tower in coming weeks,  the sources said.
Mr Churchouse declined to comment on the transaction but said he  remained confident  about Macau's property market, including the commercial sector, as  some companies  were  expected to relocate there from Hong Kong to  reduce their operating costs.
'There  isn't any good-quality office space in Macau,' said Mr Chruchouse.
'If you look at offshore markets such as Hong Kong, where rents  for  grade A office space [in Central] are  between HK$120  and HK$200 per square foot, Macau looks very cheap.'
Other factors set to boost the city's property market included rising employment, a growing population and a strong economy,  Mr Churchouse said.
The 22-storey AIA Tower  includes  17 floors of grade-A offices and  five floors of shops and parking  space, with a total floor area of 437,000 square metres.
The complex is  in Nan Van district  near Hotel Lisboa and the Bank of China building.
The  building was completed in 2001 but remained unoccupied until May 2005, when a joint venture led by Morgan Stanley Real Estate Funds, with investors including Hong Kong-listed Pioneer Global Group and US financial giant Wachovia Corp, acquired  it for HK$600 million.
The Morgan Stanley fund has an effective 60 per cent stake in the property, with Pioneer Global holding 25 per cent and Wachovia the remaining 15 per cent.
Following a year-long renovation completed in the second quarter of 2006, the tower was relaunched and rebranded with US insurance giant AIA as the anchor tenant.
The average rents for the property range between HK$14 and HK$19 per square foot, compared with  about HK$7  before the renovation, according to property consultants.
Even though the quality of grade-A office space in Macau was lower than that of Hong Kong's top-end office buildings, demand was strong as  expatriates moved into the city, said Franco Liu Pui-lam, director and head of Savills' Macau office.
Occupancy at the AIA Tower jumped  to 90 per cent from 30 per cent after renovation,  Mr Lau said. 'There are just a handful of qualified grade-A buildings in Macau,'  he said.
'We expect  rents to continue to rise by 15 per cent per  year,  taking into account that there will be no new supply in the market over the next three years.'
However, Mr Liu said he did not expect  active trading in  office properties  because of limited offers on the market.
Property investment has slowed following a delay in the government approval process for major development projects in the wake of  the corruption  scandal that brought down the then secretary for transport and public works, Ao Man-long.
In January, delays in project approvals  prompted Speymill Macau to cancel a HK$1.45 billion investment in Bel-Lago, a 50-storey residential project.
The development is being built by global property giant LaSalle Investment Management in  Nam Van Lake district near  Macau Tower.
Sign of confidence
The purchase reflects firm's confidence in the city's property market
Just over a week ago, Speymill bought a Macau property for, in HK$1.02b



Speymill close to HK$1.3b deal for Macau's AIA Tower