Foreign Firms Expected To Continue Office Downsizing In HK
HONG KONG – Multinational corporations (MNCs), especially banks, are expected to continue slashing their office footprint in the Chinese territory this year, reported Bloomberg on Thursday morning (11 February, SGT).
“I will not be surprised to see this” trend continue, especially among major MNCs with bulk-area leases that are finding it difficult to reduce operating expenses, said Colliers International’s Research Head for Hong Kong and the Greater Bay Area (GBA), Rosanna Tang.
Consequently, she foresees that office rents in Hong Kong would drop by about 7 percent in 2021. Figures from another property consultancy, Savills, showed that office rents fell 17 percent last year, or the highest in 13 years due to the mass protests and the COVID-19 outbreak.
Notably, multinational financial firms in the Chinese territory have been surrendering office space to reduce costs, exerting downward rental pressure in the priciest office market of the world.
For instance, Standard Chartered and BNP Paribas recently shed office space at their headquarters in Hong Kong. In 2020, UBS gave up 1 level at its HQ in Li Po Chun Chambers at Sheung Wan, shared sources who requested anonymity as the matter is private. At the same time, Macquarie Group and Nomura Holdings surrendered office premises within the Central District.
The lenders’ moves are part of a broader trend among MNCs in Hong Kong, which are adapting how they work due to the COVID-19 pandemic. It has also significantly impacted the city at a time, when Beijing’s national security law has lessened Hong Kong’s appeal as a global financial hub.
Consequently, MNCs accounted for 75 percent of the city’s overall relinquished office space (628,000 sq ft) last year, based on statistics from Cushman & Wakefield (C&W).
In turn, office vacancy in Hong Kong has spiked, with that in Central hitting the highest in 18 years in December, data from JLL showed.
Still, government statistics revealed that firms from mainland China have been steadily growing their presence in the city over the past few years. They now occupy 22 percent of offshore offices established in Hong Kong, surpassing companies from Japan and the United States.
