HSBC Holdings, the world’s fourth-biggest bank, said yesterday it will occupy 53,000 square metres of new office space in Shanghai

HSBC Holdings, the world’s fourth-biggest bank, said yesterday it will occupy 53,000 square metres of new office space in Shanghai’s financial district for its China headquarters.

The bank will take 20 floors at the Shanghai IFC complex, which is due to be completed by 2010, from Hong Kong’s Sun Hung Kai Properties, the two companies said in a joint statement.

The statement did not disclose details of the proposed transaction.HSBC said the new office space would support its expansion across China. The bank launched its domestically incorporated Chinese unit in April, allowing it to conduct full-fledged local-currency business.

HSBC Group chairman Steven Green said at a groundbreaking ceremony for the IFC project that the bank expected to grow significantly in China. He did not say whether HSBC would buy or rent the IFC office space.

The bank had not yet made a decision on what to do with its existing Shanghai office building, also in the Pudong financial district, he told reporters.

One of the two towers of the 400,000-sq-metre Shanghai IFC complex, which will also include two hotels and a shopping mall, will be named the HSBC Building, the statement said.

Sun Hung Kai executives said they were optimistic about Shanghai’s office property market and expected to lease out the entire project before its completion.

Jones Lang LaSalle, a global real estate consultant, said in a recent report that office rents in Shanghai would spiral higher this year partly because of limited new supply.

Grade A office rents increased 23 per cent year-on-year to US$1.06 per sq m/day in 2006 in Pudong.But with several large, new, top-grade office buildings scheduled to be completed in the next few years, office rents are likely to trend lower, Jones Lang Lasalle said, adding that rising office property prices had pushed down investment yields to an average of 7 to 8 per cent.

Beijing’s moves to cool the property market have not dampened investor sentiment in Shanghai in the first quarter, real estate consultant CB Richard Ellis Group said in a recent report, as overseas investors, including Morgan Stanley, made more acquisitions.

Source: The Business Times, 26 June 2007