The development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) is helping businesses from Mainland China to enter the Hong Kong market and use the city as their launchpad for global expansion. In a report from global real estate consultancy Knight Frank, Patrick Mak, Executive Director Head of Kowloon Office Strategy & Solutions & Head of Tenant Representation, Greater China, discusses which sectors are most likely to leverage Hong Kong’s connector status and identifies three emerging office hubs in Kowloon that have the potential to reap benefits.
What does Hong Kong offer these businesses?
As an international financial centre and the world’s largest offshore renminbi business hub, Hong Kong provides professional services to help mainland enterprises go global. With the government supporting policies in various aspects to boost regional cooperation and integration within the GBA, the pull factors to attract mainland companies to locate in Hong Kong keep getting stronger.
What is the main driver right now?
The Outline Development Plan for the GBA, issued by the Central Government in February 2019, highlights the goal to build a globally competitive modern industrial area, and one of the key themes that stands out is a commitment to improve access to financial markets throughout the GBA. This shows the mainland government’s commitment to improving capital flows throughout the region, which will benefit Hong Kong, and specifically the office market.
Which business sectors have the most potential?
According to our in-house data, interviews from landlords, as well as information from tenants and agency practitioners, biomedical, family office, TMT [technology, media and telecoms] and emerging and high growth companies are the four new potential mainland businesses to come to the Hong Kong market.
What does Kowloon offer these companies?
Kowloon’s competitive rent positioning compared to the leading GBA cities is already a factor attracting companies from the GBA, especially Guangzhou and Shenzhen.
In addition to the traditional core business district in Central and Admiralty, and CBD2 [centred around the former Kai Tak Airport site] in Kowloon East, we believe that the GBA development, coupled with improved transportation infrastructure such as the commencement of the Sha Tin and Central Link in 2022, will allow some emerging office hubs in Kowloon to grow. While GBA companies tend to be more cost-sensitive, they also look for locations directly connected to the GBA cities. As a result, we foresee more office leasing demand in Kowloon will be generated.
In which locations, specifically?
We have identified three emerging office hubs in Kowloon that have greater potential to reap the benefits brought by the development of the GBA. These are:
Kai Tak Development Node. Well connected to cities in the GBA via the Intercity Through Train, this is one of the key commercial hubs in CBD2 with huge growth opportunities in the area. Once the infrastructure and amenities become mature, it will become an alternative choice for a well-developed office location in Hong Kong.
Cheung Sha Wan – Lai Chi Kok. The upcoming and notable new office supply in these two districts will transform them into one of the largest office hubs in western Kowloon. They should be particularly attractive for businesses looking to capture GBA opportunities and enjoy easy access to the container terminals and airport.
CBD1.5 – XRL Station [the West Kowloon cross-boundary high-speed rail station] Given the large-scale of development in the central part of Kowloon, its close proximity to Tsim Sha Tsui and the West Kowloon Cultural District, together with the XRL topside project, this will become an important up-and-coming office hub in Hong Kong.
What’s the longer-term outlook for these new hubs?
Supported by strong connectivity with the extensive transport network, we believe these three emerging office hubs will further strengthen their unique positioning as up-and-coming commercial hubs in Hong Kong.
With occupiers looking for space that meets the needs of the future, these areas should become their top priority. On top of that, if occupiers are looking for opportunities to invest for the future, these emerging business hubs will serve the purpose with the most potential. Looking ahead, the GBA will continue to gather momentum to develop into a world-class city cluster, and we expect that the leasing demand from Chinese enterprises will rebound and keep rising upon the reopening of the border.