A unit of state-owned China Taiping Insurance Group is in advanced talks to acquire a newly built office tower in Hong Kong from Henderson Land Development Co., according to people with knowledge of the matter.

China Taiping is negotiating to buy the building at 18 King Wah Road in North Point, said the people, who asked not to be identified because the deliberations are confidential. It’s not clear which unit of the Chinese insurer is buying the tower. The building is valued at about HK$10 billion ($1.3 billion), according to one of the people.

Henderson Land shares rose 0.5 percent to close at HK$53.05 in Hong Kong, reversing earlier losses of as much as 1.2 percent.

The discussions add to evidence of buoyant Chinese demand for commercial property in Hong Kong, the priciest market in the world. A Chinese state firm this month led the record HK$40.2 billion acquisition of a 75 percent stake in a 346-meter skyscraper called The Center. In that deal, China Energy Reserve and Chemicals Group was the buyer and billionaire Li Ka-shing’s CK Asset Holdings Ltd. was the seller.

“We expect to see more such deals from Chinese companies given the strategic location of Hong Kong and the scarcity of saleable Grade-A office buildings here,” Henry Chin, head of research for Asia Pacific at CBRE Group Inc., said by phone. “These are good choices for insurers as long-term investments.”

The Center purchase stoked optimism that China’s government, which months ago increased scrutiny of outbound property deals, is starting to ease up after the twice-a-decade Communist Party congress wrapped up last month.

Hong Kong’s skyscrapers command the highest rents in the world, according to a September report from Knight Frank, which said rental costs are more than four times higher than in Singapore. Rental growth will continue to be robust on an influx of mainland Chinese tenants, Knight Frank said.

Earlier Deals

A mainland Chinese company, LVGEM (China) Real Estate Investment Co., last month announced the HK$9 billion purchase of a building from Wheelock & Co. Earlier this year, Henderson Land Development Co. paid HK$23.3 billion for the first commercial land sold by the government in the Central district in more than 20 years.

China Taiping, headquartered in Hong Kong, is the only state-controlled Chinese insurer based overseas, with roots dating back to 1929 in Shanghai. The group’s premium income exceeded 100 billion yuan ($15 billion) in the first half of this year, a record that compares with 120 billion yuan for all of last year, according to its website.

In an emailed response to questions, China Taiping said the group and its units have “stable premium income in Hong Kong, and, under the preconditions of safety and profitability, in accordance with the principle of matching assets with liabilities, conduct various investments. For this specific project, the company doesn’t comment.”

China Taiping and its units already have their own premises in Hong Kong and don’t have plans to shift offices, according to its email.

Erika Leung at Henderson Land’s corporate communications department did not return multiple calls and emails seeking comment.