In the world’s priciest city, even the securities regulator finds itself priced out of prime office space

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The SFC, which is paying HK$253.67 million in rent in the coming year, needs 180,000 sq ft of space for 960 staff.

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Aerial view of office buildings in the Central district in Hong Kong, as of 30th, May 2012. Photo: SCMP

Enoch Yiu

Published: 2:15pm, 5 Feb 2018Updated: 11:42pm, 5 Feb 2018

In the world’s most expensive city, even the financial industry overseer needs to put up cash, or be priced out of prime office space.

That is what’s happening to Hong Kong’s Securities and Futures Commission (SFC), as it finds its HK$3 billion (US$383.5 million) budget insufficient for even half of the asking price of a top-tier, Grade A prime office in the city centre.

The SFC, which has been renting space at the Cheung Kong Centre since 2013, is due to relocate by 2022, with the option to break the current lease in 2020. The agency, which needs 180,000 square feet (16,700 square metres) of space to accommodate 960 employees, had been looking to buy its own office as a hedge against the city’s soaring rental prices.

The SFC must set aside HK$253.67 million for the fiscal year starting in April for the city’s most expensive real estate, even if its landlord - Hong Kong’s wealthiest businessman Li Ka-shing of CK Asset Holdings - doesn’t raise next year’s rent. Before moving to Cheung Kong, the SFC was housed at Hongkong Land Holdings’ Chater House building.

Rental prices for prime offices soared in Hong Kong to the top of the world in 2017 for the second year running, as mainland Chinese companies with deep pockets chased after premium space with marquee addresses. The most expensive space in Central is now demanding US$323 (HK$2,523) per sq ft per annum, or HK$210 per sq ft per month. That is more costly than New York’s Midtown, London’s West End and Beijing’s Finance Street.

The prices for buying commercial space also surged, bolstered by a couple of blockbuster sales in 2017 that set records, putting the option of buying way out of the SFC’s budget. The money set aside translates to HK$16,660 per sq ft, which is not even enough to get an office among the city’s Top 10 locations, according to property agents.