Despite measures to cool commercial property speculation, a leading insurance company recently entered into a HK$4.5 billion agreement to purchase a Kowloon Bay office building.
The acquisition of the West Tower at One Bay East at 83 Hoi Bun Road - being built by Wheelock Properties - by Manulife shows that long-term investors still favor rent- generating properties.
The outlook on Kowloon Bay has been particularly bullish as the government is keen to develop it into a new business hub.
Just a stone's throw away stands the headquarters of conglomerate Dah Chong Hong Holdings, which was acquired by CITIC Pacific in the early 1990s before the handover.
Dah Chong Hong was subsequently floated on the Hong Kong bourse, but that building on Kai Cheung Road was not included in its assets, a person familiar with the firm noted.
CITIC Pacific's winning bid for Dah Chong Hong was considered by some to be extremely high at the time. But by the time the latter was listed in 2007, its market value far exceeded the acquisition price.
It is worth noting that apart from the headquarters block, CITIC also got a luxury residential building at Kadoorie Hill when buying Dah Chong Hong.
It held the property for rental revenue for a long time before redeveloping it in recent years. CITIC has been wise in hanging onto these prime properties as they are scarce in the market, mostly remaining in the hands of old enterprises.
This has prompted an experienced banker to comment that mega acquisitions in Hong Kong follow different rules.
While overseas acquisitions focus on the target's current earning power and future growth potential, company buyers in Hong Kong eye real property assets instead, he explained.
So long as the deal involves real estate and the buyer has holding power, inflation will be their friend.
Given enough time, they will almost certainly win big in the end. Siu Sai-wo is chief editor of Sing Tao Daily