Mainland Chinese Firms To Drive HK Office Demand
HONG KONG – A new report from Colliers estimates firms from mainland China would lease 18.06 million sq ft of office space in Hong Kong come 2025, reported the South China Morning Post (SCMP) on Tuesday afternoon (21 September, SGT).
By 2025, the real estate consultancy foresees that Hong Kong’s central business district (CBD) would contain 20 million sq ft of net leasable office space.
“We believe mainland firms will become the key demand driver for CBD offices in the next few years, especially after the border reopens,” wrote Colliers in a new report.
“We forecast new office demand by mainland firms could increase 4 million sq ft in gross floor area in the next five years, assuming 30 percent of growth of new mainland firms to Hong Kong to reach 2,580 firms by 2025, with each taking an average space of 7,000 sq ft.”
The property consultancy’s estimates are based on the trend that the office size requirements of mainland Chinese firms averaged 7,000 sq ft from 2015 to August 2021.
Based on the average workspace size and the 1,986 mainland Chinese companies currently operating in the city, these firms are currently leasing a total of about 14 million sq ft of office space. However, the percentage of new office space occupied by such entities declined from 26 percent in 2015 to 16 percent in August 2021.
Since 2016, around 60 percent of new office leases by mainland Chinese companies in the city are located in the central business district, which includes Central and Admiralty. This indicates that about 2.5 million sq ft of the projected 4 million sq ft in potential new mainland demand would be in that area by 2025, Colliers said.
In the past few months, several office rental transaction deals in Central have been clinched by mainland Chinese companies. These include 13,000 sq ft of office space in One Exchange Square by China Life Franklin Asset Management. One IFC saw China International Capital Corporation and Hoi Tong Securities renting 13,000 sq ft and 15,000 sq ft of workspaces respectively, while Huatai Securities occupied 26,000 sq ft of office space in The Center.
“Hong Kong’s office leasing market is very dynamic and very transparent, and I believe the flight-to-quality opportunities in the CBD are providing more options for all tenants who are looking to build their brand and move into an area that has traditionally been seen as more expensive,” said Rosanna Tang, Colliers’ Research Head for Hong Kong and Southern China.