According to JPMorgan's estimate, the full leasing of West Kowloon IGC could lead to a 4.3% increase in New World Development's rental income

JP Morgan's research report indicates that the bank will become the first major office tenant of New World Development (00016.HK) at the West Kowloon West Kowloon Cultural District building, set to relocate from its current lease at Kwun Tong Waterfront Plaza in 2028. There are no signs that the office located at Chater House in Central will move.

The bank believes this move further signifies West Kowloon as a new financial hub, with offices of UBS, Morgan Stanley, and Deutsche Bank also located in the area, which will help accelerate the pre-leasing progress of IGC, also located in West Kowloon under New World Development, representing positive news for the company.

According to data, the rental level at International Commerce Centre (ICC) is between HKD 60 to 80 per square foot per month, while the recent transaction rents for IGC range from HKD 45 to 55 per square foot. Assuming the average office rent for IGC is HKD 50, and retail rent is HKD 100, with efficiency ratios for office and retail parts at 80% and 65% respectively; when the IGC floor is fully leased, it should bring a 4.3% growth in rental income for New World Development. In terms of net profit, IGC is expected to contribute 2.7% to New World Development's earnings