Active investments to sustain growth beyond Central CBD
Source of opportunity
We reiterate our positive view on HK office landlords as: 1) the market is well
supported by one of the lowest vacancy rates among major cities globally, and
2) we see HK as a ‘jewel of the bay’ location, with the ability to tap into sizeable
potential demand amid structural trends including China’s liberalization of
financial markets, growth of “go global” flows, and the Guangdong-Hong
Kong-Macau bay area build-out. At only c.2% vacancy with no completions
expected in the next five years, we think the Central CBD rental market will
remain strong (rents +4% 1H17). HKLand’s guidance for its portfolio to continue
positive rental reversion into 2018 further supports our thesis. Reiterate Buy.