Hong Kong Has Slight Edge Over Singapore As Business Hub

HONG KONG – A recently published study by CBRE claims that Hong Kong has the slight advantage over rival Singapore as business hubs, reported the South China Morning Post (SCMP) on Wednesday afternoon (3 May, SGT).

Across seven categories, the Chinese territory took the lead in three categories, namely the availability of talent, the scale of its financial industry, and its sufficient supply of office space.

On the other hand, Singapore bagged the honours in two categories – the scale of its tech sector, as well as corporate ESG efforts and the government’s efforts to promote eco-friendly buildings.

“Hong Kong SAR and Singapore are both firmly established as popular locations for multinational corporates to locate their Asia-Pacific headquarters,” stated CBRE in its study.

Meanwhile, the two cities were tied in two categories: office rents and prices, as well as influence in the Asia Pacific region.

It’s hard to say which has the lead in office rents and prices, as office rents in Singapore have surged by 43 percent in the last three years. In comparison, Hong Kong, once the world’s most expensive office rental market, recorded its steepest falls in about 10 years in 2022.

“Despite the narrowing rental gap, Singapore remains a top destination for global tech companies planning to set up corporate Asia Pacific headquarters,” said CBRE’s Head of occupier research for Asia Pacific, Ada Choi.

CBRE also thinks that a spike in office supply in Hong Kong is also likely to further drag down rents. Comparatively, the office stock in Singapore is merely 73 percent of Hong Kong’s. Also, the Chinese territory is poised to add 10 percent of its current office supply between 2023 and 2026, while Singapore will only add 7 percent of its present office stock during that period.

While Hong Kong features a more diverse range of commercial areas than Singapore, the latter intends to accelerate decentralisation from its central business district (CBD) by establishing other CBDs in the next 2 decades.

In terms of commercial real estate investments, investors continue to be lured by office assets in Singapore due to their stable returns and strong price performance, noted CBRE’s Research Head for Asia Pacific and Global Head of investor thought leadership, Henry Chin.

“Deeply discounted office assets in Hong Kong also offer favourable prospects for value-oriented investors,” he said. “In the coming months, the debt funding gap for Hong Kong offices, resulting from interest rate hikes and weakening capital values, could trigger more discounted sales and create other attractive prospects for buyers,” Chin added.