Hong Kong banks will start shifting front-office operations into the Island East district, with one company moving its trading floor there by early 2014, said Martin Cubbon, chief executive officer of Swire Properties Ltd.
“It’s already started on a very small scale,” Cubbon said in an interview at Swire’s Miami offices, without giving more details. “We’re now going to have traders there. The trading floor of a big bank will be there.”
Swire, the biggest commercial landlord in the Island East district, may seek to spend as much as $1.5 billion in the next seven years to renovate older industrial buildings into office space, Cubbon said. The Hong Kong-based company has benefited from tenants seeking to relocate from the city’s central business district, where office rents are among the highest in the world, to other easily accessible neighborhoods.
“Banks want to expand at an affordable pace and that will compel them to go to places like Tai Koo place,” Cubbon said, referring to a complex of 10 office towers in the Island East district.
Swire Properties owns about 10.6 million square feet (985,000 square meters) of prime office space and 2.4 million square feet of retail space in Hong Kong. It has about 6 million square feet of commercial real estate in mainland China, according to a March statement.
The company’s shares lost 12.6 percent this year through yesterday, compared with a 5.8 percent decline in the benchmark Hang Seng Index.
Slower growth in China will have a limited impact on Hong Kong as investors and consumers seek out business, cultural and educational opportunities found in few other places in Asia, Cubbon said. China’s economy is forecast to expand 7.8 percent this year, the same as last year and down from 9.3 percent in 2011, according to the median of 53 economist estimates compiled by Bloomberg.
“There’s a slowdown in growth, not a contraction,” Cubbon said. “I think people lose sight of that. It’s still growing reasonably well in Hong Kong. People will keep coming.”
Swire Properties was spun off from Swire Pacific Ltd. in January 2012. Swire Pacific, created as a trading company in London in 1816, also bottles Coca-Cola in China and supplies offshore oil rigs.