HONG KONG (BLOOMBERG) - As analysts start turning bearish on Hong Kong home prices, the commercial property market is showing no signs of cooling, with Chinese companies shelling out record amounts for trophy buildings.

Sellers have reached out to potential buyers including Industrial & Commercial Bank of China, Bank of Communications and Fosun International, according to brokers who asked not to be named because the information is private. AIA Group is among bidders for a Swire Properties commercial building in Kowloon Bay that may fetch HK$8 billion ($1 billion), Hong Kong Economic Times reported on Wednesday (Nov 25), citing unidentified people.

Hong Kong, which boasts the most expensive office rents in the world, has become a sought-after destination for Chinese companies seeking to boost their global brands. They are also drawn by the prospect of higher returns and the potential for further currency appreciation on signs that the mainland economy is slowing.

Buying a property is also a way for international companies to eliminate the risk of costly rent increases in the future, real estate analysts said.

Hong Kong isn't the only destination for Chinese firms. Last year, Ping An Insurance (Group) Co. paid US$1.5 billion for 70 per cent of a building in London's Canary Wharf, and Anbang Insurance Group Co bought the Waldorf Astoria hotel in New York for US$1.95 billion. Still, Hong Kong is often the first port of call for Chinese companies.

"There is definitely an increasing trend of PRC capital coming offshore and Hong Kong is the easiest place to move it to," said David Raven, regional director of Asia-Pacific capital markets at Jones Lang LaSalle.

Evergrande Real Estate Group and China Life Insurance bought office blocks in separate transactions worth a combined HK$18.35 billion (S$3.33 billion) in mid-November, breaking previous price records.

"I expect this to continue as major occupiers in Hong Kong see a of lack of future office supply and are concerned their rents will increase," said John Davies, executive director for Institutional Investment Properties at CBRE Group. "I still think major occupiers will look to buy their own buildings in Hong Kong - to satisfy occupancy needs and manage future costs and limit exposure to what will be office rental growth."

Prices of Grade-A office space in Hong Kong's Central district are up 78 per cent since the beginning of 2010, and 121 percent in the Kowloon East district over that period. The gains come against the backdrop of weakness in other parts of the property market.

On the residential property side, prices could decline by as much as 20 per cent in the next three to six months, Bocom International Holding said. Retail rents are also falling as the city's appeal as a shopping paradise for mainland tourists has waned, with Jones Lang LaSalle Inc. expecting street rents in Central to drop a further 10 per cent in 2016 after falling about 20 per cent to 30 per cent this year.

Sigrid Zialcita, managing director of research for Asia- Pacific at Cushman & Wakefield in Singapore, says Chinese insurers will become major investors in Hong Kong commercial real estate as part of their global portfolio diversification. Chinese insurance companies only hold about 1 per cent of their assets offshore, compared with 10 per cent to 15 per cent for their US and European counterparts, she said.

Ziacita's date shows price gains for Hong Kong office buildings have outstripped rent increases, nearly doubling since the third quarter of 2009, while rents are up slightly more than 50 per cent in the period. Though rents in Central increased 12.5 per cent in the third quarter from the year-earlier period, yields remain the lowest among financial centers, behind New York and London.

Grade-A office yields have been hovering at an all-time low of 2.8 per cent to 2.9 per cent since the beginning of 2013, Simon Lo, executive director of Asia research at Colliers International, said in a research note.

Given the acute shortage of Grade-A office space and occupancy rates running at about 98 per cent, the trend of financial companies buying property for their own use to manage future costs - instead of renting - may be poised to continue. Last year, Citigroup paid US$697 million for an office tower in Kowloon East. Manulife Financial Corp. picked up a similar- sized block at the same development for US$580 million in 2013.