Here's why tech tenants are ditching Hong Kong for Bangalore and Singapore

They account for under 6% of Grade A office space in H1, one of Asia’s lowest.

Hong Kong’s attractiveness as a leading tech location in Asia is dented by its hyper-expensive and limited office market that has allowed economic powerhouses like Bangalore, Singapore and Shenzhen to power through the regional rankings, according to a report from Colliers.

Also read: Hong Kong trails behind Singapore in technological readiness

The SAR ranks eighth in the top tech locations in Asia as technology occupiers account for under 6% of Grade A office space in the first half of 2018, a figure that is one of the lowest proportions in Asia. Contrast this with Bangalore where the IT sector accounts for the lion’s share of around 60-70% of gross office space in recent years.

“Hong Kong is not usually seen as a key centre of innovation, and we are not ready to recommend it as a top location for technology occupiers,” the report’s authors said.

The city also commands the world’s highest rents for CBD office space with Central holding on the distinction as the world's most expensive prime office market for the third straight year where prime office occupancy costs stand at a whopping $2,405 psf annually, according to a report from CBRE. 

However, Hong Kong has the potential to work on its attractiveness to tech firms given its proximity to South China and the Chinese tech capital, Shenzhen, observed Colliers. Leading tech companies like Facebook, Alibaba and BitMEX have also leased locations in the SAR, attesting to the growing appeal of the city.

Beijing has earlier committed to pitch in for Hong Kong's IT sector upgrade with the Chinese Academy of Sciences planning to establish an affiliated organisation in Hong Kong and arrange for two of its institutes to set up [branches] at the science park. This will be complemented by the establishment of a Greater Bay Area (GBA) academicians’ alliance which will be made up of top academics from Macau, Guangdong and some 40 Hong Kong members of either the Chinese Academy of Sciences or the Chinese Academy of Engineering.

The government is also working overtime to foster tech talent through the Hong Kong Science & Technology Park which provides over 3.5 million sq ft of laboratory and office space with a focus on biomedical technology, electronics, green technology, information and communication and material and precision engineering.

Also read: Hong Kong unveils first unmanned warehouse at Science Park

Bangalore is crowned as the top tech location in Asia on the back of its explosive growth, depth of talent pool and low staff costs and rents followed by Singapore who continues to book stellar socioeconomic scores. Chinese cities performed strongly on the index with Shenzhen, Beijing and Shanghai sealing the top five.

The report ranked cities based on socio-economic factors which takes into account economic output, employment considerations, workforce orientation and availability of talent; property factors which takes into account employer costs, office accommodation; and human factors which studied personal tax rate, cost of living and quality of living.