Hong Kong, 5 September 2017 - Colliers International (NASDAQ and TSX: CIGI) today launches its first and only Hong Kong focused Occupier Survey in which 174 occupiers from various industries across Hong Kong were interviewed. The survey indicates that companies are becoming more optimistic about their business prospects with the majority of respondents expecting their businesses to either expand (44%) or remain on the same scale (40%) in the coming three years, only 3% of the respondents are expecting a contraction. A positive outlook will translate into a sustainable growth of headcounts with 38% of the respondents expecting more hires in the coming years, especially for the Banking and Finance and the ICT sectors, while PRC companies are the most confident in terms of business and headcount growth.
When it comes to choosing their offices, the right location and rental costs are the most important factors. However, different business sectors weigh these two factors differently. “The core-CBD is still the preferred home to most Banking and Finance companies as they consider that a right business location is more important than rental costs. On the other hand, insurance companies have opted to move into decentralised office hubs as they are highly sensitive to rental fluctuations.” Daniel Shih, Director of Research said.
While decentralisation has drawn a lot of attention lately, only 20% of the surveyed companies are actively planning to relocate their offices. However, more than 30% of the respondents have not considered relocation. Opportunities to achieve greater cost savings and to upgrade to a better office are the two leading factors in considering relocation. Companies in the Technology, Media and Entertainment sectors are least likely to relocate while a higher percentage of Professional Services, and Sourcing and Trading companies are planning for possible relocations as they are more sensitive to rental cost-effectiveness. Overall, fringe CBD area is the most popular relocation destination with 30% of the respondents, mainly from the core-CBD and fringe-CBD, considering it their top choice.
Office layouts for Hong Kong companies are still dominated by the traditional approach and the open plan design. Only 13% of the respondents have adopted Activity-Based Working (ABW) or Agile Workplace approaches. Cost savings is the most important driver behind adopting alternative workplace solutions, followed by better collaboration among employees and the increase in space utilisation. Among the surveyed industries, Information and Communications and Professional Services sectors are the early adopters of alternative workplace solutions.
Regarding flexible workspace, Technology, Media and Entertainment (29%) and Information and Communications (20%) have been the early adopters of flexible workspace. They also constitute the largest group (25%) of startup companies in Hong Kong. However, 13% of the surveyed companies have also leveraged on the flexibility and cost savings offered by flexible workspace.
The results of the latest survey confirm our view that office rents on Hong Kong Island will increase further. The core-CBD will still be considered as the premier location for the Banking and Finance industries. As we expect PRC companies will continue to expand and drive up rents in the CBD, the decentralisation trend should gain stronger momentum due to the widening rental gap between the CBD and other districts. In addition, alternative workplace solutions offer good opportunities for cost savings as most companies are not planning to increase their rental budget while increasing their headcounts.