Crypto Firms Help Support HK Office Market
HONG KONG – Real estate consultancy Savills revealed that new economy firms, like those related to blockchain, cryptocurrencies, and non-fungible tokens (NFTs), are generating new demand for Hong Kong office space, reported the South China Morning Post (SCMP) on Wednesday morning (25 May, SGT).
“Many of these new start-ups, which have made substantial profits over the past few years, are being run by young talent and entrepreneurs. This new generation favours modern and well-designed offices on the periphery of traditional business districts… with smaller floor plans and a much more contemporary feel, rather than more traditional grade A offices,” said Savills in a new research.
For instance, companies such as digital asset platform Satori; 8 Block Capital, which focuses on cryptocurrencies; and Mantra Dao, which offers services on three blockchain networks (Ethereum, Binance Smart Chain, and Polygon) are emerging as new office tenants on the edge of Central.
“Central and Sheung Wan have become target areas for (such) companies as they look to expand and set up their operational footprint,” said Richie Lau, Director of office services at Colliers Hong Kong.
“If a company has all the approved licences in place and is already trading, expansion is an obvious next step and we’ve seen companies like HashKey recently expanding into Three Exchange Square and taking a whole floor, with an existing presence in Cyberport.”
This trend has provided some relief to Hong Kong’s office sector, which has witnessed a sharp increase in office vacancy in recent months as global companies either surrender office space or reduce their property footprint because of the city’s harsh COVID-19 measures.
In fact, JLL data showed that while overall office vacancy in Hong Kong remained unchanged month-on-month at 9.4 percent in April, it surpassed the 9.1 percent seen in February 2022.
Currently, the Chinese territory’s existing available office supply stands at 6.2 million sq ft, while new office stock until 2025 is forecasted to hit 11 million sq ft. Given that historical office absorption ranges between 1.3 million sq ft and 2.7 million sq ft from 1991 to 2019, the office vacancy level could reach 17.7 percent come 2025, which is a record high under normal situations, noted Savills.
According to Knight Frank, the prevailing historic high in terms of office vacancy is 15.9 percent, which was registered by Hong Kong Island in July 2003.