A shortage of serviced office space in Hong Kong is forcing some companies to look further afield and according to property consultants, Singapore is the market which is gaining.
Due to the popularity of the serviced office market in the region, Hong Kong, which currently has the most expensive serviced office space in the world, is experiencing a severe shortage in available space. Worldwide fund manager MGPA, told Reuters, this has caused a number of companies to travel to the rival serviced office location of Singapore.
Simon Treacy, the Group Chief Executive of MGPA told the news outlet: ‘Unlike Singapore, Hong Kong has not managed its land supply well. Vacancies are very low in Hong Kong and rents are rising…Some international banks will more actively consider Singapore as the area where they’ll expand, so on a net-net basis, Singapore’s growth will outpace Hong Kong.’
The sky-high rents in Hong Kong, along with the difficulty in acquiring space, also play a factor in the equation.
In the second quarter of this year, rents for office space in central downtown Hong Kong rose to a historical high of HK 120 per sq ft.
Savills’ Senior Director of Research and Consultancy, Simon Smith, who is currently based in Hong Kong, told the Straits Times that the increase had been so marked due to ‘mainland initial public offerings, growth in the financial services sector and also the demand from mainland (Chinese) institutions.’
Property consultant CB Richard Ellis has stated that only a small amount of office space is expected to become available in Hong Kong this year, as opposed to Singapore, were more than 3 million sq ft of office space will come onto the market this year.
In comparison, Hong Kong will be able to offer only 1.3 million square feet, with hardly any space available in the city’s central business area.
Previous Post
What Next For Comet’s Commercial Property Portfolio?
When something is effective and low in cost the demand increases rapidly.