While many other companies are taking a wait-and-see approach to their office space amid COVID-19, companies from mainland China have committed to around 143,000 square feet of offices in the first half of 2020.
Amid heightened tensions between Beijing and Washington, there is concern that proposed U.S. legislation could lead to the delisting of some Chinese companies. Setting up shop in Hong Kong is a way to mitigate that risk.
Tech heavyweights Alibaba and ByteDance are among those that have recently committed to new leases in landmark Grade-A buildings in core districts on Hong Kong Island, where rents have fallen more than other office districts. Alibaba leased 17,000 square feet of Tower One in Times Square for HKD1.03 million (USD132,900) a month. Newly Hong Kong-listed Ganglong China Property Group has taken 2,403 square feet at Two Pacific Place in Admiralty.
“Secondary listings may not immediately result in these companies taking on large office spaces, but the downstream business opportunities for ancillary finance and business services will support overall business and ultimately, the office market,” says Alex Barnes, Head of Markets for JLL Hong Kong.
Major mainland finance companies and property developers like CMB International Capital, China Minsheng Bank, Orient Finance Holdings and KWG, are also said to have committed to additional office space in Central, which remains a prestigious address.
“Mainland Chinese tenants in the banking and finance sectors will still prefer Central while tech companies are more open to locations in other traditional commercial districts such as Wan Chai and Causeway Bay,” says Paul Yien, senior director for Markets at JLL Hong Kong.
Given its proximity to the Guangzhou-Shenzhen-Hong Kong Express Rail Link (High-Speed Rail), many firms whose employees need to regularly cross the border to the mainland are also looking to Tsim Sha Tsui. Recent transactions include China-based Fargo Wealth Management leasing 13,000 sq ft in The Gateway and IT firm Kingsoft committing to 9,000 sq ft in the same building.
This article is from JLL The Investor.