Hong Kong’s office property market has a new heavyweight from the mainland.

On December 10, Lai Sun Development and its parent firm, Lai Sun Garment, announced that JD.com, through its investment arm, had acquired several floors in the China Construction Bank (CCB) Tower at 3 Connaught Road Central for HKD 3.498 billion (USD 448.9 million).

The 27-story Grade A office tower spans roughly 111,600 square meters. JD.com said the acquisition was for its own use, adding that it plans to expand investments in supply chain infrastructure to better integrate its retail, logistics, and R&D operations in the Hong Kong market.

The deal marks another landmark move by a mainland internet company into Hong Kong real estate.

For decades, Hong Kong was often described as “Li’s city,” a nod to tycoon Li Ka-shing’s deep influence across real estate, infrastructure, energy, and retail. Property-driven capitalism was long seen as the backbone of the city’s financial identity.

Now, mainland technology and commerce giants are reshaping that model.

Companies such as JD.com, Alibaba, and Meituan are buying office properties, expanding retail and logistics networks, and applying for financial licenses, gradually embedding themselves across multiple sectors in the city. Hong Kong, once a gateway for global brands entering the mainland, is becoming a testing ground for mainland firms expanding overseas.

Timing the market bottom

JD.com’s acquisition comes at a critical juncture, as Hong Kong’s asset prices soften and mainland firms accelerate their overseas expansion.

A recent report by Jones Lang LaSalle suggests that after a six-year decline since late 2019, Hong Kong’s Grade A office leasing market is likely to bottom out in 2026. Central and Tsim Sha Tsui are already showing early signs of recovery, with rents rising 0.5% and 0.2%, respectively, in the second half of the year.

Research from Savills echoes that outlook. Despite short-term headwinds from interest rate pressure and subdued demand, the firm notes that Hong Kong’s office market is showing renewed momentum, driven by a recovery in the financial sector and stronger occupier purchases. Savills expects Central’s office rents to lead the rebound in the coming years.

That dynamic suggests that buying may now be cheaper than leasing over the long term.

JD.com paid about HKD 31,200, or roughly USD 4,000, per square meter for the CCB Tower floors, about 4.6% lower than a recent transaction involving a 43-story landmark tower in Central. Locking in assets at a cyclical low can help hedge rental volatility while preserving upside for long-term appreciation.

Looking ahead, JLL’s head of capital markets in Hong Kong, Chan Kwok Cheung, said a more active IPO market could spur office leasing activity and draw investors back into the segment.

It is at this intersection of asset price correction and rebounding demand that mainland companies are moving in.

In October 2025, Alibaba and Ant Group purchased the top 13 floors of One Island East in Causeway Bay for RMB 6.6 billion (USD 924 million) to house their Hong Kong headquarters. Earlier in June, Xiaohongshu established its first office outside mainland China in the city.

The residential market tells a similar story. According to Centaline Property Agency, buyers using Mandarin pinyin for registration completed 12,550 housing transactions in Hong Kong during the first 11 months of 2025, totaling HKD 125.6 billion (USD 16.1 billion), surpassing the previous full-year record set in 2024.

Mainland capital has once again become a major force in Hong Kong’s property market. Meanwhile, traditional local developers are scaling back. As of mid-2025, CK Hutchison Holdings and CK Asset Holdings had reduced Hong Kong assets to less than 20% of their global portfolios, reflecting a broader shift toward international operations.

Signs of recovery are also emerging. Data from the Rating and Valuation Department show that the city’s private housing price index in October 2025 was up 7.5% from its May low. Historically, commercial property prices tend to follow residential trends with a lag of 6–12 months, suggesting that JD.com and Alibaba may be positioning for both financial optimization and long-term strategic value.

Hong Kong’s appeal as a bridgehead for mainland companies going global has strengthened. Its common law system, free flow of capital, and proximity to the Greater Bay Area offer clear cross-border compliance advantages.

JD.com’s third-quarter 2025 earnings report showed overseas revenue rising nearly 214% year on year, underscoring Hong Kong’s growing importance as a hub in the company’s Southeast Asian supply chain.

Operationally, JD.com has been expanding across Hong Kong through a series of initiatives, including securing an insurance brokerage license, launching JD Mall, acquiring Kai Bo Food Supermarket, and opening a JDL Express operations center on Hong Kong Island. Each move requires consolidated office space to coordinate logistics, retail, and financial services.

Beneath the surface, JD.com’s moves are not solely aimed at locking in lower rental costs. They signal a deeper commitment to cross-border supply chain investment, using Hong Kong’s 7.5 million residents and consumption data as a proxy for Southeast Asian markets.

Mainland capital deepens as Hong Kong transforms

Mainland firms are not only expanding abroad through Hong Kong. They are also reshaping the city’s industrial landscape.

JD.com’s acquisition of Kai Bo offers a clear example. The deal integrates more than 90 Kai Bo stores into JD.com’s logistics network. Since JDL Express opened its Hong Kong Island operations center in March, the company has hired more than 100 couriers. JD.com said its average daily parcel volume in Hong Kong has grown more than 50-fold since 2023.

Historically, Hong Kong’s supermarket industry has been dominated by two chains: ParknShop, owned by AS Watson Group under CK Hutchison Holdings, and Wellcome, operated by DFI Retail Group under Jardine Matheson.

According to Euromonitor International, ParknShop held a 37.4% market share in 2020, while Wellcome had 31.4%. China Resources Vanguard followed with 1.1%, and Aeon held 0.7%. Together, ParknShop and Wellcome controlled nearly 70% of the grocery retail market.

This concentration limited consumer choice and kept prices elevated. One survey found that identical products in Hong Kong cost 30–50% more than in Shenzhen. Many residents have since adopted the routine of shopping across the border and bringing purchases back to Hong Kong.

Mainland internet companies are now challenging those dynamics through digital supply chains.

On JD.com’s Hong Kong app, the Kai Bo flagship store offers free next-day delivery for orders above RMB 299 (USD 41.9). During last year’s 618 shopping festival, JD.com’s Hong Kong and Macau sales rose about 300%. Meanwhile, Meituan’s food delivery arm, Keeta, captured 44% of Hong Kong’s order volume within a year of launch.

In October 2025, a JD.com subsidiary also obtained an insurance brokerage license in Hong Kong, marking another step by mainland technology firms into the city’s financial sector.

According to HSBC, Hong Kong is on track to become the world’s largest cross-border wealth management hub by 2028. Mainland e-commerce platforms with insurance licenses can now extend services across merchandise transactions, logistics coverage, and risk management.

Mainland activity is also reshaping Hong Kong’s capital markets. Data from Deloitte China show that as of November 2025, mainland firms, including those with dual listings, accounted for 86% of the HKD 259.9 billion (USD 33.3 billion) raised through IPOs on the Hong Kong Stock Exchange (HKEX).

Deloitte estimates that 114 new listings in 2025 raised around HKD 286.3 billion (USD 36.7 billion). Among the world’s top ten IPOs by proceeds that year, four were listed in Hong Kong, all from mainland companies: Contemporary Amperex Technology, Zijin Gold International, Sany Heavy Industry, and Seres.

Companies listed both on the mainland and in Hong Kong accounted for roughly half of HKEX’s total IPO fundraising that year, making mainland firms the dominant presence on the exchange.

From Hong Kong’s perspective, this influx is nudging the city’s evolution from a capital hub toward a broader industrial ecosystem. Mainland investment brings not only capital, but also technology, new business models, and employment, potentially lifting Hong Kong’s position in the global supply chain.

Still, challenges remain. A September 2025 survey by Airwallex found that local firms continue to face pressure from rising operating costs and currency fluctuations, which are squeezing margins.

Balancing short-term costs with long-term returns will be the central test for mainland enterprises embedding themselves more deeply in Hong Kong’s economy.

KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Wang Hanyu for 36Kr.