More firms looking beyond Central for office space in coming years
Major changes are expected in the commercial market, with mainland firms playing a key role
Few commercial property markets have as volatile a history as Hong Kong. A total of 27 million square feet of new office space has been built in Hong Kong in the last 15 years alone. That equates to a staggering 30 per cent of the office supply currently in existence across the entire city.
Today, Hong Kong remains one of the most dynamic property markets in the world, in a historically strong landlord market, aided by limited office supply and low vacancies.
But is this situation about to start changing? Hong Kong looks to be preparing for a stage of extreme transformation in the lead-up to 2020.
An examination of the market suggests a shift is on the horizon which could redefine the dynamic between landlords and tenants. A number of factors are emerging, from the evolution of alternative office hotspots and completion of new public infrastructure, to the entry of Chinese corporates into Hong Kong and changing attitudes on tenure.
There are trends in play that will reshape the city's property market and as a landlord or occupier it is imperative to look ahead at how the market may look in 2020 in order to stay competitive and maximise returns.
Until now, the presence of mainland companies in the market has been less significant than might be expected. Their number has tripled in the last decade, but they still account for less than one in eight "foreign" companies in Hong Kong.
Looking forward, this is expected to change, with the entry of mainland companies playing a major part in redefining the market. This trend is particularly evident in the finance sector, which has long been a major driver of demand for office space. Many Western financial services companies have refocused priorities, slowing expansion and the recruitment of staff, but this shortfall will likely be made up by Chinese corporates.
