Understanding the Market | Hong Kong property stocks expanded gains in the closing hours, Wharf Real Estate Investment Company rose over 4%, Alibaba's acquisition set a record for transaction amount of commercial buildings in Hong Kong this year
Hong Kong property stocks expanded their gains in the afternoon, with Wharf Real Estate rising 4.36%, HYSAN DEV increasing 3.01%, Swire Properties up 2.14%, and New World Development gaining 1.36%. Alibaba and Ant Group acquired the 13th floor office building of One Island East in Causeway Bay for HKD 6.6 billion, setting a record for transaction amounts of commercial buildings in Hong Kong this year. JP Morgan believes this transaction will stabilize the capitalization rate of Hong Kong office buildings, reduce commercial real estate risks, and attract more mainland enterprises to invest in Hong Kong office buildings
According to the Zhitong Finance APP, Hong Kong real estate stocks expanded their gains in the late trading session. As of the time of publication, Wharf Real Estate Investment Company Limited (01997) rose by 4.36% to HKD 22.48; HYSAN DEV (00014) increased by 3.01% to HKD 16.09; Swire Properties (01972) climbed by 2.14% to HKD 21.92; and New World Development (00017) was up by 1.36% to HKD 7.43.
In terms of news, on October 17, Alibaba Group and Ant Group announced an investment of HKD 6.6 billion to acquire the 13th floor commercial office building at One Island East in Causeway Bay from Mandarin Oriental International Limited, to serve as the headquarters for both companies in Hong Kong. Notably, this transaction breaks the record set in March this year when the Hong Kong Stock Exchange purchased the highest 9 floors of the Central Trading Plaza Phase I for HKD 6.3 billion, making it the largest commercial property transaction in Hong Kong this year.
JP Morgan released a research report stating that this large transaction will help stabilize the capitalization rate of Hong Kong office buildings and reduce commercial real estate risks to some extent. The bank believes that more leading enterprises from the mainland may be interested in purchasing office properties in Hong Kong as their regional or non-mainland headquarters. The bank believes that the stabilization of Hong Kong's office capitalization rate will benefit Hong Kong Land and Swire Properties. However, Morgan Stanley indicated that this transaction will impact Wharf Real Estate Investment Company Limited, as Alibaba is likely to move out of Times Square
