BABA(US:BABA) Sou Hu Cai Jing·2025-11-02 09:22Core Viewpoint - The article discusses the significant real estate transaction in Hong Kong where Alibaba, led by Jack Ma, purchased a major office building at a time when the market is experiencing high vacancy rates and declining prices, indicating a strategic move amidst market challenges [1][3][11]. Market Conditions - The Hong Kong Grade A office market is facing challenges with a vacancy rate exceeding 17%, the highest since records began in 1997 [3]. - Overall office rents have decreased by 0.8% quarter-on-quarter, with premium office prices in core areas dropping by up to 50% from peak levels [3]. - Despite these challenges, Alibaba acquired the "港岛壹号中心" for approximately 66 billion RMB, translating to about 23.5 million RMB per square meter, nearly halving the price from six years ago [3][5]. Strategic Moves - Alibaba's acquisition is part of a broader trend where tech companies are purchasing properties to establish permanent headquarters rather than merely renting office space [7]. - Other companies like JD.com and ByteDance are also making significant investments in Hong Kong real estate, indicating a shift in strategy among tech firms [7]. - The purchase aligns with Alibaba's long-term strategy of deepening its presence in Hong Kong, which has historical ties dating back to its founding [7][8]. Investment Perspective - From an asset allocation standpoint, Hong Kong's core real estate is still viewed as a "hard currency" amidst global inflation pressures, with stable rental yields [10]. - The location of the purchased property near major transportation links enhances its attractiveness for business operations [10]. - Market analysts have raised Alibaba's target price, reflecting confidence in the company's potential to leverage AI services for improved efficiency and valuation [10]. Broader Implications - The transaction raises questions about the evolving role of tech giants in the real estate market and whether they are adhering to or redefining previous market predictions regarding property values [11].