BABA(US:BABA) Guan Cha Zhe Wang·2025-10-17 06:50Core Viewpoint - Alibaba is reportedly planning to acquire the top 13 floors of the One Island East building in Causeway Bay for approximately HKD 7 billion, which would set a record for the largest single transaction of commercial property in Hong Kong this year [1][2]. Group 1: Transaction Details - The total area of the targeted floors is about 270,000 square feet, with a price per square foot of nearly HKD 26,000 [1]. - If the deal is finalized, it will not only set a record for 2023 but will also rank as the fourth largest commercial property transaction in Hong Kong's history [2]. - The One Island East building is a 24-story multi-purpose Grade A office building, with a total area of approximately 500,000 square feet, located in a prime commercial and entertainment area [2]. Group 2: Market Context - The Hong Kong office market has been experiencing rising vacancy rates and declining rental prices since 2025, influenced by high interest rates and a sluggish global economy [6]. - Recent reports indicate that the demand for Grade A office space in Hong Kong has begun to improve, with a narrowing decline in rental prices, suggesting a potential recovery in the market [6]. - In Q3 2025, the rental prices for Grade A offices decreased by 1.1%, a significant improvement compared to earlier quarters [6]. Group 3: Strategic Considerations - Alibaba's potential acquisition may be driven by the need to secure long-term office space, as the company currently leases multiple floors in Times Square, with leases expiring in 2028 [5]. - The transaction could also be seen as a strategic move to reduce ongoing rental expenses amid a challenging economic environment [6]. - The strengthening of the Renminbi and recent policy adjustments in Hong Kong may provide favorable conditions for mainland investors to acquire assets in the region [8].