One Bay East-East tower snags biggest transaction price in Hong Kong

It was acquired for a whopping $5.4b.

A significant transaction was recorded in 2Q 2014, with the acquisition of One Bay East – East tower for HK$5.425 billion (HK$10,596 per sq ft) by Citigroup who intend to use the development as an owner-occupier.

According to a research and forecast report from Colliers International on 2Q 2014, this deal marks the largest transaction price for an en-bloc commercial development in Hong Kong, with the transaction price being struck at a 20% increase over the previous sale price of the West Tower in the same development, which was sold for HK$4.5 billion (HK$8,790 per sq ft) in April 2013.

The sale of this building has driven up the total value of office sales transactions above HK$30 million by 74% QoQ from HK$3.8 billion in 1Q 2014 to HK$6.6 billion in 2Q 2014 – slightly above the long-term average level of HK$6.4 billion per quarter.

Here's more from Colliers International:

Notwithstanding the weakened market sentiment which is a result of additional transactions costs arising from the double stamp duty, long-term investors continue to see Hong Kong

as a key business location and remain active in the search for quality premises for their own use or investment purposes.

The benefits for Citigroup of consolidating the majority of their operations under one roof are numerous, with an increase in operational efficiencies, potential rental savings and also future certainty of occupancy costs and tenure as a long-term owner-occupier.

This strategic investment by Citigroup reflects their confidence in Hong Kong’s office market and furthermore, when viewed collectively with the recent acquisitions in Kowloon East by Swire Properties and Mapletree, supports the continuing transformation of Kowloon East into Hong Kong’s “CBD2”.