Property investment stocks are facing enormous pressure amid concerns developers of Two International Finance Centre (IFC) in Central might undercut office rents to lure tenants, according to ABN Amro.
Anton Kwang, property analyst at the securities house, expected effective rents at Two IFC might be initially priced as low as HK$25 per square foot a month after its launch.
He believed corporate expansion would be rare in the present economic situation, while most investment banks, major potential clients, had finished their relocations in 1998.
As top office space in Central such as Citibank Plaza and Exchange Square were only rented at HK$30 to HK$40 per square foot, Two IFC had to provide incentives to tenants for its initial launch, Mr Kwang said.
The 88-storey, two million square feet commercial tower has been developed by Sun Hung Kai Properties (SHKP), Henderson Land Development, Hong Kong & China Gas and Bank of China Group.
Mr Kwang said undercutting rents at the project would not significantly affect SHKP's valuation because it was not a large project. However, it did create enormous pressure on property investment stocks such as Hongkong Land, Great Eagle Holdings and Hysan Development.
