Innovation platform buys Hong Kong office tower as state-linked buyers seek bargains

A Hong Kong office tower was recently acquired by an innovation platform backed by Ningbo’s city government, signaling that mainland government-linked institutions could play a more prominent role in the city’s commercial property market. The Yonggang Science and Technology Innovation Centre purchased the Konnect building in Wan Chai for HK$800 million, which is approximately 11% lower than the original asking price.

The innovation platform was established in June to facilitate cross-border technology collaboration between Hong Kong and Ningbo. It aims to create investment funds in both cities to support technology ventures through an "offshore incubation, onshore acceleration" model.

Ning Shing (Holdings), the wholly state-owned enterprise operating the platform, did not respond to requests for comment. Analysts believe this acquisition highlights a broader shift in the type of mainland buyers targeted in Hong Kong's commercial property market, with government-linked entities now pursuing strategic long-term uses rather than purely investment-driven acquisitions.

Senior associate director of investment at Savills Hong Kong, Nicholas To, noted that the buyer profile has shifted from leveraged developers focused on land banks to institutions and state-linked entities. This marks a strategic purchase, rather than a trading position.

Oscar Chan, head of capital markets at JLL Hong Kong, stated that central government-affiliated organizations have been active as potential buyers throughout the years. He explained that office purchases are typically for self-use, and the reason for the current purchase is that prices have become much more attractive. The Konnect purchase is part of a broader increase in acquisitions by mainland state-linked institutions.

In early 2023, a subsidiary of China Resources bought a hotel in Kwai Chung for HK$953 million to convert it into student accommodation. In December, China Merchants Commercial REIT purchased the Austin Avenue Hotel in Tsim Sha Tsui for HK$206 million, converting it into a student hostel, and Sino United Publishing acquired a hotel in Wan Chai for HK$205 million, also for student housing.

While it is premature to label this as a dominant new force, it is a promising buyer category to watch.