[I-bank focus]More en-bloc deals from decentralized areas

    AIA (01299) is in discussions with Swire Properties (01972) to buy its Kowloon Bay office project for HK$8bn, according to HKET.
  J.P. Morgan said the en-bloc office market has intensified recently with China Life (02628) buying West Tower of One HarbourGate and Evergrande (03333) buying MassMutual Tower.
  As new supply in core districts like HK Island is rather limited, JPM expects en-bloc transactions to mainly come from decentralized areas like Kowloon East, which will inevitably draw demand out of the HK Island office market with continuous improvement in transportation infrastructure.
  It noted that AIA now occupies office buildings in Wanchai, North Point, Quarry Bay, Kowloon City and Kowloon East and the company may consolidate its operations in the new building.
  "This will make our neutral view on Central office rental growth next year more likely." JPM said in a research note.
  In terms of valuation, the reported price of HK$8bn is ~3.9% of Swire Properties' NAV. The transaction could yield as much as a 40% margin. Assuming rent at HK$40 psf, the transaction yield would be 3.3% which is a fair valuation given the project will only be completed in 2017, JPM said.