Hong Kong property

Hong Kong’s Swire Properties in talks to sell two office towers in city’s east

The company is putting the Cityplaza Three and Cityplaza Four towers on the market amid strong demand for office space in the city

PUBLISHED : Thursday, 10 May, 2018, 10:08pm
UPDATED : Thursday, 10 May, 2018, 11:13pm

Hong Kong developer Swire Properties is in talks to sell two high-end offices in the east of Hong Kong Island to take advantage of a strong market for office properties, it said in a stock exchange filing on Thursday.

The buildings are the 21-storey Cityplaza Three and the 24-storey Cityplaza Four in Swire’s Taikoo Shing residential and commercial development in Quarry Bay, it said. 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.

“Swire Properties is constantly looking for opportunities to enhance returns for its shareholders,” a spokesman said. “The office market is very robust, and there has been keen market interest in en-bloc office sales recently.”

Analysts see 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’s office market as a whole have risen with eastern end of Hong Kong Island leading gains last month with a 0.6 per cent month-on-month rise, according to property firm JLL’s latest Property Market Monitor released on April 25.

The relatively cheaper rents in the eastern part of the island have attracted more companies who are finding the traditional business district of Central more expensive.

Alvin Lam, a director at Midland Surveyors, estimated that the average price of grade A office space in the Quarry Bay area could exceed HK$30,000 per square foot.

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The planned Swire sale follows on from what was the world’s most expensive real estate transaction, the sale last year of the 73-storey The Center tower in Central, which went 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.

Office leasing demand in the Asia-Pacific region as a whole was resilient in the first quarter in 2018, driven by demand from financial, technology, media telecoms and co-working sectors, real estate agency CBRE Asia-Pacific said in research last month.

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.

Earlier this month 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 in the Admiralty district rising 21 per cent over the same period a year earlier. Reservations increased 10 per cent at Cityplaza and rose 1 per cent at the nearby Taikoo Place.