The sub-district offers larger office spaces, affordable rent and good business amenities.
Whilst Hong Kong’s Central remains as the top location for financial and technology occupiers, investors may be eyeing opportunities in fringe areas along its Central Business District (CBD) due to their fluid markets, according to Colliers International’s Top Occupier Locations in Asia: Implications for Investors report.
According to Colliers, Wanchai is set to offer the greatest potential for tenants looking to relocate amongst the CBD fringe areas as transport links improve due to the completion of the Shatin to Central MTR link and as new supply appears in Wanchai North following the relocation of government offices. The sub-district also offers large office spaces, affordable rent and good business amenities, and should stay popular for the next decade.
“The tight supply in the core Central and Admiralty district implies that CBD fringe locations may well present the best opportunities to acquire office assets that offer the prospect of steady rent growth from both finance and technology tenants at reasonable prices,” Colliers said in the report. “Financial occupiers may also consider areas slightly further afield like Kowloon Bay where the US bank JP Morgan plans to build a technology centre for greater China.”
Overall, Hong Kong remains one of the top finance locations in Asia with rent from financial tenants underpinning income streams to investors. The report also found that it shows the highest correlation of any Asian financial centre between the level of the stock market and office rents.
Colliers forecasts the average annual rent growth from Grade A offices in Hong Kong to climb 2.5% over 2018 to 2022 compared to 5.4% in Singapore.
“A key reason for our cautious forecast is the vulnerability of rents in Hong Kong in the near term to falling financial markets,” Colliers explained. “With no evidence so far that international or Chinese banks plan to retrench significantly or depart from Hong Kong, we expect rents to steady in 2020.”
With regards to tech occupiers, Hong Kong came out as a ‘wild card’ location with the potential to improve its rank due to the wide gap in rents between the CBD and outlying districts, according to Colliers.
Given firm demand and limited supply, as well as rapid expansion in the fintech sector, prospects for medium-term rent growth remain positive. Hong Kong continues to be an emerging location for tech occupiers thanks to its proximity to Shenzhen, the recent expansion by tech leaders such as Alibaba and Facebook, and surging investments in the emerging fintech sector.
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