HKEX Buying 9 Floors at Hongkong Land’s Exchange Square for $810M in Year’s Top Deal

Hongkong Land has chalked up the biggest office deal of the year in its hometown, with stock exchange operator HKEX committing to buy nine floors at the developer’s Exchange Square complex in prime Central district for HK$6.3 billion ($810 million).

The rare strata sale at Hongkong Land’s flagship includes the top nine floors of One Exchange Square (levels 42 to 50) and the retail space on levels 1 and 2 of the tower, the Jardine Matheson-controlled builder said Thursday in a release.

The deal encompasses a net floor area of 147,025 square feet (13,659 square metres) and marks Hong Kong’s biggest office transaction by value since early 2024, when the Nexxus Building in Central changed hands for HK$6.4 billion, according to Alex Leung, chief surveyor at CHFT Advisory and Appraisal.

For Hongkong Land, which is pursuing a new strategy to focus on “ultra-premium” office spaces, the sale is a welcome spark after the London-listed group reported a 2024 loss of $1.39 billion as falling rents and lower valuations continued to dog the developer’s hometown office portfolio.

“This is a pivotal transaction for Hong Kong, Central and Hongkong Land,” said CEO Michael Smith. “It stands as one of the largest commercial office deals in Hong Kong in recent years and is a new milestone in Hongkong Land’s execution of its strategy.”

Immersive Experience

The stock exchange has been part of the Hongkong Land portfolio since 1986, when Exchange Square officially opened as the bourse’s dedicated home. HKEX has its current office on the eighth floor of Two Exchange Square and also leases Connect Hall, the former trading floor turned events venue owned by the Hong Kong government.

With its office and retail buy, to be completed in phases over the next 12-18 months, HKEX promises “a holistic, integrated and immersive” entrance lobby leading to Connect Hall and, through a dedicated elevator, to the new headquarters.

“Central’s interconnected ecosystem is the backbone of Hong Kong’s financial sector, and I am so pleased that HKEX is now making the district its permanent home,” said Hongkong Land chairman John Witt. “Together, we share a common vision to create a distinctive headquarters that embodies the city’s standing as one of the world’s leading financial centres and underscores our unwavering confidence in Hong Kong’s future.”

Strata sales at Exchange Square are exceedingly uncommon, with the last deal on record being The American Club’s 1988 purchase of levels 48 and 49 at Two Exchange Square for HK$75 million, according to CHFT’s Leung.

A more recent big-ticket strata deal, in 2023, saw Hong Kong’s Securities and Futures Commission acquire a set of 12 office floors at Swire Properties’ One Island East in Quarry Bay for HK$5.4 billion.

Executing on Strategy

Hongkong Land plans to deploy the transaction proceeds from the strata sale towards strengthening the group’s balance sheet and commencing a $200 million share buyback.

Under a 10-year roadmap announced last October, the builder aims to reallocate capital from condo developments to integrated commercial projects in Asian gateway cities and move beyond developing investment properties for its own portfolio to become a fee-earning manager of third-party capital.

Profits from Hongkong Land’s prime property investments fell 5 percent in 2024 on lower contributions from the Central office portfolio, a set of 12 interconnected commercial buildings at the heart of the financial district.

The portfolio got a boost in February of this year when global law firm Holman Fenwick Willan took up two floors at Hongkong Land’s Alexandra House on Des Voeux Road Central, leasing 22,000 square feet in total, after almost three decades spent in Admiralty.

“Within six months of announcing our new strategic direction, we have already demonstrated our ability to recycle capital and our unwavering commitment to create significant shareholder value,” Smith said Thursday.