Mainland Chinese Landlords Venture Into HK’s Coworking Sector
HONG KONG – Property experts revealed that more commercial property lessors from mainland China are expected to enter Hong Kong’s coworking space sector, reported the South China Morning Post (SCMP) on Wednesday noon (18 August, SGT).
“More mainland-backed developers, especially those without a large office portfolio in Hong Kong, will try to operate coworking space in Hong Kong as it is a low-risk route for them to enter the leasing market,” noted Martin Wong, Knight Frank’s Research Head for Greater China.
Last week, Hui Wing-mau, one of the richest business moguls in mainland China, opened a 23,600 sq ft coworking space on level 76 of The Center, which is considered as the priciest office building in the world.
In March 2018, Hui, the 37th richest person in mainland China and the Chairman of Shanghai-based Shimao Property Holdings, acquired a 20 percent interest in the office tower located in Hong Kong’s Central from Li Ka-shing’s CK Asset Holdings. The Center office building is valued at HK$40.2 billion (US$5.12 billion), and Hui disclosed that it was his largest personal investment in Hong Kong.
Similarly, mainland China-based conglomerate China Resources opened a flexible workspace at the China Resources Building in Wan Chai last October.
“Adopting a hybrid workspace model has become the new trend as demand for flexible workspaces has increased immensely, especially after COVID-19,” commented Tinnie Choi, Head of sales & operations of Hui’s coworking space at The Center.
She shared that some coworking space providers have ceased operations as they were unable to afford the rents, giving advantage to office lessors who have decided to launch their own flexible workspace.
“You can see a trend in which many landlords are choosing to operate by themselves” and their rent burden is not high as they can control the rents being the property owner, Choi explained.
In contrast, coworking space providers that don’t own their office space like WeWork and KrSpace have either stopped doing business in Hong Kong or have substantially slashed their footprint. For example, Hui’s coworking space at The Center was previously occupied by Australian coworking player Victory Offices, which closed in December 2020 after a year of opening due to the pricey rent and bad effect of the global health crisis.
CBRE’s Senior Director for advisory & transaction services for office in Hong Kong, Dane Moodie, revealed that landlords are increasingly mulling to invest in their own coworking space as a way of providing an extra amenity to their occupiers.
These lessees are usually large occupiers that want to expand temporarily into a new space, or new entrants in Hong Kong that want versatility while trying to plan their long-term property requirements.
“In the past, low vacancies, strong office demand and high rents had deterred landlords from dedicating space for this type of investment,” explained Moodie.
Based on data from CBRE, coworking space in Hong Kong reached 2.61 million sq ft, making up 3.2 percent of the city’s total office supply. Coworking space providers are scattered across 315 locations in the city, charging HK$2,950 per desk per month on average.