GBA to boost office demand

Demand will continue to come from companies in the financial sector.

Hong Kong offices can expect an influx of tenants from the financial sector as the Greater Bay Area (GBA) plan boosts demand for commercial property space, according to a report from JLL.

The GBA connectivity project aims to improve access to financial markets with key areas of focus, including inter-bank lending, trading of derivative and wealth management products, as well as enterprises’ ability to issue cross-boundary RMB bonds, which will improve capital flows into Hong Kong and prompt companies to set up shop in the city.

Over the past 10 years, an increasing number of companies from the financial, insurance, real estate and business services sectors, which are more commonly referred to as FIREBS, have moved beyond the traditional central business district into new office markets, such as Hong Kong East and Kowloon East.

In turn, the proportion of persons employed by those sectors who work in Central fell from 29% in 2008 to 22% in 2017.

“Given that a large number of foreign investment banks, accounting, insurance, professional services and more recently legal firms, have already decamped from Central, the city’s decentralised office markets are likely to benefit most from a growing share of the business pie,” Denis Ma, head of research for JLL Hong Kong, noted.

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The opening of more cross-border investment channels and the Chinese government’s commitment to promote its “One Belt One Road” policy could also continue to drive long-term demand for office space from mainland China corporates, as they seek to expand their business beyond the domestic market, he added. “The trend of mainland China corporates preferring to establish and leverage on the prestige of a Central office address in recent years is likely to continue.”