Alibaba and Tencent Expand in China with Strategic Land Purchases, Bet on Tech Sector's Recovery

Alibaba Group Holding Ltd BABA and other Chinese Big Tech firms like Tencent Holdings Ltd TCEHY have been actively purchasing land in mainland China despite challenges in the technology and real estate sectors. 

Recently, Tencent invested roughly $890 million (6.42 billion yuan) to acquire over 70,601 square meters of land in Beijing’s Haidian district to provide centralized office space for its 12,000+ employees in the city. 

This move comes as the tech sector is recovering from regulatory changes and job cuts, with the industry seen as vital for China’s digital economic growth, SCMP reports. 

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The year 2024 saw significant updates happening in the economy, serving as a big boost. Recent reports claimed China is weighing a stimulus package to drive the stock market.

Alibaba recently finished building its new Beijing campus in the Chaoyang District, covering 470,000 square meters. Last October, video game company miHoYo and Alibaba’s Ant Group made significant land purchases in Shanghai and Hangzhou, respectively. 

miHoYo acquired a plot in Shanghai’s Caohejing district for over 1 billion yuan, while Ant Group bought land for 1.5 billion yuan in Hangzhou’s Xixigu fintech cluster. JD.com Inc JD acquired land worth over 3 billion yuan in Beijing’s Yizhuang area.

As office vacancy rates rise in China’s major cities, leading to lower rental prices, these tech giants tapped the opportunity to expand their physical presence. CBRE reports that the vacancy rate for grade-A office spaces in cities like Shanghai, Beijing, Guangzhou, and Shenzhen could have reached 21% by the end of 2023.

Meanwhile, a separate update indicated that China has approved over 40 artificial intelligence (AI) models for public use in the past half-year. This would be interesting for the economy battling a semiconductor technology from the U.S.

Price Action: BABA shares are trading higher by 1.03% at $74.77 premarket on the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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