2) PRC companies continue to dominate office leasing market in Central
China’s Ping An Bank, a PRC financial institution, has agreed to pay HKD160 (USD20.65) per sq ft per month, for office space on a high floor in Exchange Square covering 12,000 sq ft (1,100 sq m), relocating from a similar-sized office in Bank of America Tower in Admiralty. The rental is more than double the average asking rent for Grade A office space in Hong Kong. It illustrates that PRC corporates’ willingness to pay for a prestigious location, particularly the CBD, is continuing despite the high rental costs. (Source: Mingtiandi
, 23 October 2017)
While numerous MNCs are seeking more cost-effective offices in Island East and Wong Chuk Hang, PRC companies, which represent 30% of total new lettings in the core-CBD in 2017, are persistently pushing into Central. According to Colliers Research, Central office rents have increased 23% from September 2014 to September 2017, driven by demand from PRC firms. Given the demand for offices in reputable locations from PRC companies and no new supply, we expect rents in Central to increase by 5.7% YOY in 2018.
3) China-based coworking operator naked Hub plans Hong Kong IPO
Shanghai-based coworking space start-up naked Hub said on Friday it plans to go public in Hong Kong after a fresh round of fundraising next year, potentially adding more Chinese “new economy” companies to the Asian financial hub’s stock exchange. Naked Hub, backed by Hong Kong private equity firm Gaw Capital, said it expects to close its third financing round of up to USD200 million by the end of this year. The start-up is currently the largest coworking operator in Shanghai and is also present in over 35 locations across Asia.
Meanwhile, Swire has launched a coworking space on last Tuesday, turning “blueprint,” a technology start-up accelerator providing free working space founded in 2014, into a full-fledged coworking hub occupying 30,000 sq ft (2,787 sq m) at Taikoo Place in Hong Kong Island East. The coworking hub was expanded from 20,000 sq ft (1,858 sq m) to the current area. (Source: Reuters
, 20 October 2017; SCMP
, 18 October 2017)
Apart from the ongoing decentralisation from core areas, larger occupiers can save operational costs by using a hybrid of traditional and coworking space - leasing a smaller traditional office for core functions and locating others into coworking space. Occupiers can also benefit from collaborative working environments - which is particularly popular among divisions related to business development.
It is reasonable for landlords to offer surplus space in their portfolio for coworking use. As more MNCs are relocating to more decentralised districts, developers should consider launching coworking spaces in Kowloon East, where the majority of new supply will come to the market, to capture relocation demand. Landlords can enhance the business community within their portfolio by connecting MNCs and start-ups, thereby potentially increasing the attractiveness of their portfolio. In the latest Policy Address, it has been announced that a “Space Sharing Scheme for Youth” will be implemented. The scheme is a platform for owners of revitalised industrial buildings and commercial buildings that offers leases for eligible non-governmental organisations at a rent no more than one‑third of the market rental for the operation of coworking spaces or studios. Hereby, the increasing coworking space demand amid the strongly growing start-up industry, can be addressed. (Source: The Chief Executive’s 2017 Policy Address