Hong Kong’s Non-core Neighbourhoods To See Faster Growth
Than Central Over Next Decade
13 April 2015
Hong Kong continues to be the most expensive place in Asia to rent office space. To maintain its position as the most dynamic financial hub in Asia, Hong Kong needs to expand its commercial landscape, while infrastructure spending can provide immediate economic stimulus.
In the white paper “The Evolution of Office Space in Hong Kong”, Colliers mentions that Hong Kong will continue its integration with the Pearl River Delta, China’s most-vibrant economic region through improved infrastructure, paving the way for an upgraded and greater economic diversification. The paper also analyses how the improved transportation network within Hong Kong will open up new neighbourhoods for office expansion. Offices with easy access to public transport will fetch higher rents.
Joanne Lee, Senior Manager of Colliers International projects that “improved infrastructure will underpin rental growth in non-core areas to outperform that of Central district, with average monthly rents in Wan Chai and Causeway Bay to breach HK$100 per sq ft level in the next 10 years.”
Central will continue to serve as the centre of trade and financial services. But those high occupancy costs reduce the city’s appeal and are prompting a wave of non-core development that will accommodate the city’s future growth.
The evolution of front offices to locations that are outside Central is likely to take place first in Island East. It is set to attract the front offices of industries such as insurance, trading houses and information technology firms. It could eventually attract entire banking operations.
Wong Chuk Hang has the potential to attract the office operations of international fashion retailers, architectural firms and professional services companies. Industrial buildings are already being converted into offices, while the district’s connections will also dramatically improve with the new MTR line extension.
In the long run, Kowloon East will be the primary choice for professional-service providers. It will continue to evolve into an attractive and feasible location for split-office operations, particularly from the banking and finance industries.
Colliers findings suggest that the pace of rental growth in non-core locations including Wan Chai and Causeway Bay, Island East and Kowloon East will outperform the rate of growth in the core district of Central.