Swire Properties sells Hong Kong office tower to Gaw-led consortium for $1.27 billion – ET RealEstate

HONG KONG: Swire Properties Ltd has agreed to sell an office tower in eastern Hong Kong Island to a consortium comprising a fund managed by real estate private equity firm Gaw Capital Partners and other partners for HK$9.85 billion ($1.27 billion).

Hong Kong-listed property arm of Swire Pacific Ltd has agreed to sell the entire office building, Cityplaza One, to Rocha Land Ltd, in a move to realise cash from its investment for use in general working capital, Swire Properties said in a filing to the Hong Kong bourse late on Monday.

The property group said the deal is part of its ongoing business strategy of disposing certain non-core assets to enable the company to recycle capital and channel it to new projects.

“We remain committed to Hong Kong and to our long-term investment strategy in our home market,” an official with Swire Properties said in a statement. “We’re confident in the Hong Kong office market’s long-term outlook.”

Swire Properties said the deal will be settled partly by cash and by the issue of shares representing 37% of the holding company of Rocha Land, which in turn will represent an indirect equity interest of 37% in the Cityplaza One property.

Swire Properties is expected to record a gain on disposal of about HK$2.01 billion on a statutory basis, while Swire Pacific is expected to record an attributable gain on disposal of about HK$1.65 billion on a statutory basis, it added.

Separately, Swire Pacific’s flagship carrier Cathay Pacific Airways Ltd is undergoing a restructuring, recently announcing that it will slash 5,900 jobs and end its regional carrier as it grapples with a plunge in demand due to the coronavirus pandemic.



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Hong Kong’s TEC leases one lakh sq ft office space in Mumbai, Bengaluru – ET RealEstate

NEW DELHI: Hong Kong-based The Executive Centre (TEC), which provides premium serviced office space, has taken on lease one lakh sq ft of office space in Mumbai and Bengaluru to expand its business in India despite COVID-19 pandemic, a top company official said.

TEC entered India in 2008 with its first property in Mumbai. At present, it has around 30 centres in India spread over 8 lakh sq ft with a capacity of 8,000 desks, across major cities.

In an interview, TEC Managing Director-South Asia Nidhi Marwah said: “We have signed two leasing agreements in Mumbai and Bengaluru on pure rental basis.”

TEC has leased 60,683 sq ft of office space in Bandra Kurla Complex (BKC) and 40,000 sq ft in Whitefield, Bengaluru.

Marwah said the company is targeting to open these two centres by March 2021.

Asked about the office space demand during the COVID-19 pandemic, she said the demand for Grade-A office space remains intact and rentals stable.

Besides IT industry, Marwah said there are enquiries for serviced office space from new industries like pharma, banking, and consultants.

She said corporates do not want to invest in setting up their own offices and are looking for flexible office space.

“We are currently operating at an occupancy level of around 85 per cent and our monthly rental collection is also above 90 per cent,” she said.

In June, Marwah had announced TEC’s plan to open five new centres by March 2021 at Bengaluru, Gurugram, Chennai and Pune with an investment of Rs 100 crore. These five centres will have a total of two lakh sq ft area with a capacity of around 2,300 desks.

“We will soon open our new centre in Bengaluru comprising 35,000 sq ft of office space,” Marwah said.

TEC’s India revenue stood at around USD 35 million during the last financial year.

The Executive Centre is Asia Pacific’s leading premium serviced office provider. It has over 135+ centres in 32 cities and 14 countries with an annual turnover in excess of USD 275 million.

Co-working or flexible workpsace space segment has grown rapidly in India in the last 3-4 years. Industry experts believe that the trend is likely to continue despite the short-term disruption caused by the spread of coronavirus disease.



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Home prices in Hong Kong ease 0.5% in July – ET RealEstate

HONG KONG: Hong Kong private home prices eased 0.5% in July, the first drop since April, as one of the world’s most expensive property markets continued to be pressured by the coronavirus pandemic and political uncertainties.

The drop in July compares to a revised no change in June. Supported by strong demand and low interest rates, prices have still gained 1.5% so far this year.

The financial centre was hit by a new wave of coronavirus infections in July, pushing housing transaction volumes to a four-month low in August. The real impact on property prices will be reflected in August and September due to a lag effect, agents said.

The market’s recovery was also capped by Beijing’s imposition of a national security law in the Chinese-ruled city on June 30, sparking a fresh exodus among residents.

“The drop is smaller than expected, it’s mainly because large-sized properties have out-performed,” said Thomas Lam, executive director of Knight Frank.

He expected the market correction will continue, citing weak purchasing power in an economic recession.

Realtor Centaline noted the secondary housing market became active again in late August as the pandemic eased in the city.

“Government easing (of) social-distancing measures also provide a positive signal,” it said.



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Hong Kong eases mortgage rules for commercial property – ET RealEstate

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HONG KONG: Hong Kong’s banking regulator said on Wednesday it would relax commercial property mortgage rules, in a move to boost liquidity in a market that has been hit hard by U.S.-China trade tensions, violent street protests last year and the coronavirus crisis.

The change lifts the cap on the loan-to-value ratio for banks providing mortgages for non-residential properties to 50% from 40%, effective Thursday.

Hong Kong Monetary Authority (HKMA) deputy chief executive Arthur Yuen told a press conference the change was designed to make it easier for the commercial sector to obtain mortgages.

Hong Kong’s commercial property market, the most expensive in the world, saw a drop in transactions in the first half, with prices of offices and retail premises dropping 15% and 10% respectively from the second half of 2019, and the pressure is likely to remain, according to HKMA.

“This will have a big psychological impact on the market,” said Dennis Cheng, senior sales director at Ricacorp (C.I.R.) Properties, of the rule change.

He expects a 20-30% rise in transactions in the next month because investors will not be required to put forward as much cash. However, he did not see a rise in prices, because of low rental yield expectations.

The HKMA tightened rules on mortgage loans several times after the financial crisis in 2009, amid a property price boom.

Alex Leung, a senior director of CHFT Advisory & Appraisal, said the relaxation would enable banks to rearrange loans to avoid the liquidation of some property owners, especially smaller investors.



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