Alibaba, which is accelerating its globalization efforts, has made a significant investment in Hong Kong. Recently, Alibaba Group and Ant Group announced a joint investment of $925 million (approximately 6.6 billion RMB) to acquire the top 13 floors of the One Island East commercial office building in Causeway Bay. This transaction not only serves to establish the Hong Kong headquarters for the two companies but also sets a record for the largest office sale in Hong Kong since 2021. Despite having moved into Hong Kong as early as 1999 and growing into a tech giant with a market value exceeding 3 trillion RMB, Alibaba has previously rented office spaces for its headquarters in the region.
At a pivotal moment fueled by AI as a key driver for new growth, this substantial purchase of the highest 13 floors of One Island East clearly underscores Alibaba's optimism for Hong Kong, indicating its determination to use this base for further global expansion. Alibaba Group Chairman Joe Tsai has unequivocally acknowledged the strategic significance of Hong Kong, emphasizing that this acquisition reflects Alibaba’s confidence in the Hong Kong economy and business environment, positioning Hong Kong as an "ideal base" for ongoing international development.
This move is not just pivotal for Alibaba and Ant; it represents a strategic step towards deepening globalization amid the AI era. The One Island East building, previously known as the Hong Kong East Hotel, owned by the Mandarin Oriental Hotel Group, was transformed into a grade-A office building after its closure in March 2019. Located in the commercial and entertainment heart of Causeway Bay, it is just a five-minute drive from the Hong Kong Convention and Exhibition Centre, offering excellent accessibility and commercial convenience.
The transaction was facilitated by CBRE. Their Capital Markets division highlighted that One Island East is set to officially complete in 2025 and will become a rare new grade-A office landmark by the sea in both Causeway Bay and greater Hong Kong, boasting outstanding location advantages and unobstructed seaviews. Alibaba and Ant indicated that the establishment of their Hong Kong headquarters will act as a catalyst for further international business expansion.
Similar to Alibaba Group, Ant Group highly values the strategic significance of establishing itself in Hong Kong. Chairman Eric Jing stated, "Ant Group is actively participating in the development of Hong Kong as an innovation hub and is deeply engaging with the Guangdong-Hong Kong-Macao Greater Bay Area. The strong entrepreneurial atmosphere in Hong Kong, coupled with its role as a bridge linking China and global markets, boosts our confidence in increasing our investment here." To promote globalization further, Jing mentioned that Ant Group will continue to enhance its investment in Hong Kong to attract top global talent and build a stronger local team.
It is noteworthy that Alibaba's acquisition coincides with a rebound in Hong Kong's office market. According to JLL’s report, bolstered by an active IPO market and persistent growth in wealth management demand, Hong Kong's overall grade-A office leasing market recorded a positive net absorption of 314,000 square feet in August. As of the end of August, the vacancy rate of Hong Kong's overall grade-A offices slightly increased to 13.5%.
CBRE's Capital Markets division reflects that this transaction indicates a shift in the office strategy of tech leaders like Alibaba and Ant Group from leasing to direct ownership, remarking that "this transition not only optimizes asset allocation but also signifies a strong confidence in Hong Kong's mid to long-term development opportunities and regional growth potential."
Another underlying factor for Alibaba's significant real estate acquisition is its rebound this year, following two years of downturn. With AI reshaping its business development, Alibaba's shares have shown a positive upswing. Recently, JPMorgan raised Alibaba's share price target for both its U.S. and Hong Kong listings to $245 and $240 respectively, up from $170 and $165. The bank noted that Alibaba's narrative has shifted from being "losing market share in the domestic e-commerce sector" to "leading internet assets in China." The core logic suggests that AI services will directly improve merchant operational efficiency and consumer experience, providing room for Alibaba to reprice in its advertising and tool services.
In this context, acquiring One Island East symbolizes Alibaba's intention to capitalize on the momentum and initiate a new phase of global expansion. Positioning Hong Kong as a foundational hub for its global expansion is not a spontaneous decision for Alibaba, but rather rooted in over 20 years of deep engagement. As Tsai observed, "Since our founding in 1999, Alibaba has continuously deepened its roots in the Hong Kong market."
For Alibaba, a global technology enterprise, Hong Kong's strategic value is complex and irreplaceable. Tsai summarizes it as four major advantages: "Hong Kong provides us with a vast pool of professionals, a robust capital market, an innovative cultural atmosphere, and advantages connecting with global markets closely." Looking back at Alibaba's development history, Hong Kong has played a crucial role at almost every key juncture.
In terms of business layout, Alibaba established its finance and legal departments in Hong Kong as early as its inception in 1999. By 2005, Taobao entered the Hong Kong market, offering services tailored for local retailers and SMEs, which first connected the e-commerce circulation chain between Hong Kong and the mainland. By 2014, Alibaba Cloud established its first overseas data center in Hong Kong. To date, Alibaba's business footprint in Hong Kong encompasses payments, e-commerce, technology, and more.
In terms of capital operations, Hong Kong serves as Alibaba's core base. In 2019, Alibaba, which was already listed on the NYSE, completed its secondary listing on the Hong Kong Stock Exchange, raising over $10 billion, marking one of the largest IPOs in Hong Kong's capital market in recent years. This move symbolized a deepening connection between Alibaba and Hong Kong's capital market. At that time, Jack Ma proclaimed, "On Alibaba's 20th anniversary, we are achieving significant milestones—returning home, listing in Hong Kong." By 2024, Alibaba transitioned from a "secondary listing" to dual primary listings in New York and Hong Kong, becoming the first Chinese tech firm to achieve this status, further solidifying Hong Kong's role as its core international capital operations hub.
As an international business hub and global financial center, Hong Kong is also a vital battlefield for Cloudary Financial, one of Ma's enterprises. In September this year, Cloudary's securities subsidiary successfully obtained approval from Hong Kong's Securities and Futures Commission to upgrade its license to offer virtual asset trading services, enabling it to provide trading services for digital assets such as Bitcoin and Ethereum to retail and professional investors, aiming to build its "next-generation Web3 financial ecosystem."
Now, with Alibaba's significant investment of 6.6 billion RMB in purchasing a headquarters building in Hong Kong, it undoubtedly further demonstrates its commitment to deepening its presence in the region. CBRE's Capital Markets division notes that acquiring headquarters-level properties often implies more in-depth local operations and a longer-term market commitment. "We have also observed increasing interest from more enterprises in core commercial properties in Hong Kong's central area as well as other types of real estate projects, further confirming Hong Kong's sustained appeal as an international financial center and regional hub."
In fact, in recent years, it is not just Alibaba; many emerging tech giants from the mainland, such as JD.com, Xiaohongshu, and ByteDance, are also ramping up their investments in Hong Kong. Positioned at this historic opportunity of globalization and AI, the shift from leasing to purchasing headquarters signifies an ongoing global strategy for Alibaba, as well as an upgrade in its commitment. Enhancing connections with Hong Kong will undoubtedly assist Alibaba in accelerating its growth into a global tech giant.