Hong Kong’s Swire sells two office towers in Cityplaza development for US$1.9 billion
Company will use the proceeds from the sales for nearby redevelopment projects as well as a new project in Shanghai
Hong Kong developer Swire Properties said on Friday that it had agreed to sell two office towers at its development in the east of Hong Kong Island for HK$15 billion (US$1.9 billion), using the money for other projects in Hong Kong and Shanghai.
It will sell the 21-storey Cityplaza Three and the 24-storey Cityplaza Four in the Taikoo Shing residential and commercial development in Quarry Bay to Henglilong Investments Limited, the company said in a filing to the Hong Kong stock exchange late on Friday.
“Swire Properties remains steadfastly committed to our home market of Hong Kong, and our long-term strategy has not changed,” the company said in separate emailed comments.
Cityplaza Three has floor areas of 18,700 square feet to 19,300 square feet while Cityplaza Four’s floors are 23,600 square feet to 24,300 square feet, according to the company’s website.
The buyer is a company incorporated in the British Virgin Islands for the purpose of investment holding, the Swire filing said. It did not elaborate.
It added that the proceeds from the sale would go to projects including the redevelopment of Taikoo Place, adjacent to Taikoo Shing, the expansion of Pacific Place in the central Admiralty area and the extension of the Citygate commercial development in Lantau Island, as well as to Swire’s new Qiantan project in Shanghai, among others.
The Swire sale follows closely after what was the world’s most expensive real estate transaction, the sale last year of the 73-storey The Center tower in Central to a consortium of Hong Kong investors and buyers from mainland China for HK$40.2 billion (US$5.1 billion).
The tower was sold by tycoon Li Ka-shing, Hong Kong’s richest man, as part of a restructuring of his Hong Kong assets.
Swire said in May when it first announced it was in talks to sell the two Cityplaza properties that the office market was very robust, and there had been keen market interest in sales of whole office blocks.
Analysts meanwhile have predicted strong momentum for office leasing in Hong Kong, driven by demand from cash-rich financial and technology firms, especially those from mainland China.
Rents in the city as a whole rose at their fastest pace in two years, according to property firm JLL’s May Property Market Monitor, adding that demand mainly focused on eastern Hong Kong Island and the east of Kowloon, which accounted for around 76 per cent of the new lettings in May.
Swire Properties saw its underlying profit, excluding revaluation gains on investment properties, increase 10.1 per cent to HK$7.83 billion for the year ended December, helping to boost the conglomerate’s overall results.
In May the company reported a strong performance in its office rental business in the first quarter of this year, with rental reservations – which include lease renewals, new leases and rental reviews – at Pacific Place rising 21 per cent over the same period a year earlier. Reservations increased 10 per cent at Cityplaza and rose 1 per cent at Taikoo Place.