Hong Kong’s Central Could Face More Vacant Offices Due To UBS Relocation To West Kowloon
HONG KONG – Due to UBS Group’s looming transfer in 2026 to an upcoming mixed-use commercial property above the West Kowloon terminus station, the city’s vibrant Central area could see more vacant office space in the future, according to a report from Bloomberg last week.
This was stated by analysts from Bloomberg Intelligence after major office landlord Sun Hung Kai Properties announced last week that the Swiss bank is the first anchor tenant at its upcoming development.
Consequently, demand for office properties on the outskirts of Central could weaken as newer and cheaper office buildings become available in other districts. In particular, ageing office towers like Champion REIT’s Three Garden Road are vulnerable to this risk, said analysts Yan Chi Wong and Patrick Wong.
“New Kowloon office space is winning over tenants for its cost savings and seamless travel ties to mainland China,” explained the analysts. The decision by UBS to relocate there completely could convince other corporate tenants to follow suit, as cost savings becomes paramount among commercial property tenants.
In a statement, UBS said its new office would enhance the productivity of its staff and it would also be able to house all of its local employees under one roof. It’s also located in a more accessible area thanks to its links to the Guangdong–Hong Kong–Macao Greater Bay Area (GBA) and major cities on mainland China.
Notably, Hong Kong’s office market has been significantly impacted by its harsh quarantine rules amidst a weakening economy. In fact, CBRE data show that demand for Grade A office space has plummeted, with vacancy levels increasing to record highs and office rents falling by nearly 30 percent since mid-2019.
Still, the analysts think that Central’s office submarket could be more resilient. As a matter of fact, office landlord Hongkong Land revealed that asset manager Invesco will relocate to one of its office buildings in Central.
Furthermore, private equity behemoth Carlyle and auction house Christie’s have pre-leased office space at an upcoming office tower in Central being built by Henderson Land.