HONG KONG: Swire Pacific, the Hong Kong office landlord and controlling shareholder in Cathay Pacific Airways, may seek a separate listing for its property unit.

Any listing will be by way of a spinoff, Swire said in a Hong Kong stock exchange filing yesterday. It said it hasn't applied for such a listing of Swire Properties Ltd and hasn't yet decided to proceed.

Swire's statement comes as Singapore's CapitaLand Ltd and China's Longfor Properties Co seek to raise a combined $3 billion in share sales, testing the demand for Asian property stocks. Investors may be attracted to Swire Properties because of its offices and retail focus, analyst Kenny Tang said.

"Their offices and malls are all in prime areas, plus office rents are starting to recover," making Swire Properties more appealing than homebuilders, Tang, an executive director at Redford Securities said.

Swire Pacific fell 1 percent to HK$95 yesterday, before the announcement, trimming this year's advance to 78 percent. By comparison, the benchmark Hang Seng Index has risen 50 percent this year.

Hong Kong average home prices have risen 28 percent this year, prompting the government to warn it may intervene if the market becomes "unhealthy" or "unfair". Chief Executive Donald Tsang said Monday that the city is "closely" monitoring the market.

Prime office rents in Hong Kong's Central and Admiralty districts are bottoming out and may rise this quarter as the economic recovery encourages companies to expand, property company DTZ Holdings Plc said last month.

Monthly rents for Grade A offices in the districts fell 34 percent to an average of HK$80 ($10.32) per square foot in the third quarter from a year earlier, the lowest in almost two years, according to DTZ on October 13.

Hong Kong's yearlong recession ended in the second quarter, when an increase in export demand from the mainland helped the economy grow 3.3 percent from the previous three months.

Swire owns the Pacific Place shopping and office complex in Admiralty, where CLSA Asia-Pacific Markets and Societe Generale are tenants. In eastern Hong Kong Island, where it's the biggest commercial landlord, its buildings house upper -tier companies such as Time Warner and JPMorgan Chase.

Office and retail rental income accounted for almost 90 percent of Swire Properties' revenue in the first six months of this year.

Bloomberg News

(HK Edition 11/03/2009 page4)