Conglomerate Swire Pacific (0019.HK) plans to sell its Festival Walk shopping mall in Hong Kong to Singapore’s Mapletree Investments for HK$18.8 billion ($2.9 billion), as strong consumption boosts rents for retail space in the territory.
Swire Pacific said in a filing to the Hong Kong stock exchange on Friday that its unit, Swire Properties, plans to complete the sale on Aug 18, with Temasek-owned (TEM.UL) Mapletree having already paid HK$1.8 billion as a deposit.
Mapletree’s acquisition comes as China and Hong Kong unveil a series of measures, including lending curbs and interest rate rises, to cool the red-hot residential property market that is fueling popular discontent.
But commercial property has been strong, with buying of luxury brands from Chinese tourists helping boost high-end retail rents, while the vibrant financial markets have fuelled office rents, the most expensive in the world.
“If you look at the various segments in China/Hong Kong, the commercial properties are perhaps what developers are looking at now, given the various policy concerns with regards to the residential side,” said Wilson Liew, an analyst at Kim Eng Securities in Singapore.
“So it isn’t a surprise that many developers are turning their attention to commercial properties, and retail properties in particular have recently taken off in a bigger way,” he said.
“For Mapletree, it could perhaps be a seed property for a future China REIT or something similar.”
Goldman Sachs is the financial adviser for Swire Properties on the deal.
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