Recovery? RM21.83 Billion office tower in HK sold to Chinese state company

Image Source: Straits Times article, from http://www.discoverhongkong.com

This is so huge that even my good friend who is not that interested with property investment sent me this morning. She said, “WOW.” Based on the price for the transaction, this is really a wow. A Hong Kong office tower was sold at a record HK$40.2 billion (RM21.83 billion) to a consortium led by a Chinese state company. China Energy Reserve and Chemicals Group was the lead in a consortium which purchased The Center, a 73-storey landmark skyscraper. It is the fifth tallest tower in Hong Kong. There are many articles online about this. One of it is here, by South China Morning Post. Another one is here, which is pointing more towards a potential relaxation of the capital control instituted by China earlier. “Bloomberg: Turning the Money Tap On.” (I think if the relaxation story is true, this is applicable only to Hong Kong which is part of China. Support towards Hong Kong is an internal matter and this is different from allowing Chinese companies to buy non-China related assets, especially property in many advanced countries)

Many more comments from prominent property people from the Bloomberg article as follows: “The The controls are still there, but right after the 19th congress all these large deals seem to be surfacing,” said Antonio Wu, deputy managing director of capital markets and investment services at Colliers International Group Inc. in Hong Kong. Another one by Bocom International Analyst Alfred Lau who said, The Center transaction bodes well for Champion REIT and Link REIT, which have properties for sale.” According to Raymond Cheng, director of Hong Kong and China property research at CIMB Securities, “Capital controls still have some impact, and capital flows have slowed down a little bit, but demand from mainland investors is still quite strong.” He added, “I expect as time passes gradually things will become less strict.” Raymond concluded by sharing that mainland companies like Grade-A commercial property in Hong Kong’s Central and Admiralty districts, preferably with a sea view and naming rights. Here is another article in Reuters for this. 
Suddenly, things seem to be positive here in Asia? Well, if China is now relaxing the capital control, many countries would benefit, especially those property markets that Chinese love. That country with many cities which are the most liveable in the world? Australia. It may also benefit our neighbour too, properties in Sentosa Island for example. Properties in London remains a favourite too for Chinese buyers. Last but not least of course it would also trickle down to a small property market called Malaysia. 🙂  Well, it’s going to be even more positive if a few more of such huge deals are announced in the near future, whether it’s for Hong Kong or elsewhere. Who knows, after President Trump’s visit to China in a few days time, even more changes are coming? Happy reading and following.
written on 3 Nov 2017

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