Concrete Analysis | Hong Kong’s competitiveness under threat as limited office land set to run out in 10 years

Hong Kong faces a host of issues in the property sector. While the residential supply constraints grab the headlines, there is also an acute shortage of grade A office space in the world’s most expensive market. To make matters worse, the total land supply presently set aside by the government for future development is forecast to run out within 10 years.

Recent delivery of new supply has provided a limited window of opportunity for businesses to grow and move into more modern, efficient space, while also lowering their real estate costs. However, with a significant amount of this supply already pre-committed, and very limited new supply in the next two three years, we have been advising our occupier clients to move quickly in positioning themselves in the market, in many cases some years before their lease expiry, to ensure they can secure the best solution for their businesses.

We believe Central will always be appealing to an array of tenants from diverse backgrounds. However, with rents at all-time highs and availability at historically low levels, only multinationals, Chinese financial institutions, and other financial and professional services based businesses that crave the cachet of the location can afford to be there.

Fortunately, for occupiers, the completion of new infrastructure projects coupled with the recent delivery of new office supply is accelerating the emergence of alternative commercial hubs that serve as viable, more cost effective central business districts.

Areas such as Hong Kong East, Wong Chuk Hang, Kwun Tong and Kowloon Bay are flourishing, and new locations such as Kai Tak will come online in the next decade. These districts are well served by public transport, and many are now mature offering a wide variety of dining, shopping and lifestyle amenities for workers, residents and visitors.