Zhi Tong Cai Jing·2025-10-02 07:09Core Viewpoint - UBS reports that Alibaba-W (09988) is considering acquiring the "One Island East" in Causeway Bay, which consists of 13 floors and naming rights, potentially impacting the rental market in the area [1] Group 1: Alibaba's Potential Move - Alibaba is currently leasing 170,000 square feet at Times Square, with the lease expiring in 2028 [1] - If Alibaba relocates, Times Square's vacancy rate could increase by 16 percentage points, with a current occupancy rate of 90% as of June this year [1] Group 2: Impact on Kowloon-Canton Railway Holdings - UBS estimates that Kowloon-Canton Railway Holdings (01997) could face an annual rental income loss of HKD 110 million, which is equivalent to 1% of last year's profit, based on a rental rate of HKD 54 per square foot [1] - The anticipated asset enhancement works at Hysan Development (00014) in Causeway Bay are expected to be completed between 2026 and 2027, which may continue to pressure both retail and office sectors at Times Square [1] Group 3: Market Implications - If the acquisition is successful, it could have a positive impact on the local office market, as the exit yield for the transaction is only 2.5%, lower than the level achieved by Land & Properties in April this year [1] - Reports indicate that Alibaba may acquire 270,000 square feet, increasing its current office space by 100,000 square feet [1]