Already the most expensive city in the world to occupy offices, Hong Kong’s commercial property prices are rising and a lack of new sites available for development means supply is significantly restrained.
Solutions to the problem are being sought with the redevelopment of an abandoned airport among the latest ideas to become an increasingly attractive and viable prospect, Bloomberg reports.
Kai Tak Airport has been idle since 1998 and developers are eyeing the site as one that could play a major part in keeping Hong Kong office space within the realms of affordability, particularly for the banking groups that form such an important part of the city’s wider economy.
The fear among property service professionals in Hong Kong is that office rents will reach levels that force businesses to reconsider their options in Asia and possibly shift all or some of their operations to sites in the rival financial services hubs of Singapore or Shanghai.
It is hoped that a radical revamp of the disused airport could do for Hong Kong what Canary Wharf did for London’s office space market in recent decades by delivering millions of square feet of new supply outside the city centre.
Canary Wharf is now well established as a second financial services centre in London after The City, with several of the world’s biggest banks having moved their headquarters to the purpose-built site.
Simon Smith, head of Asia research at Savills, told Bloomberg that Hong Kong will be obliged to decentralise its office space supply in much the same way as London and other developed markets around the world have when shortage became a serious problem.
Canary Wharf boasts some of the largest buildings in Europe and the list of high-profile occupants with a significant presence there includes the likes of HSBC, Bank of America Merrill Lynch, Barclays and Citigroup.
Editor’s notes: In Q1 of 2023, Hong Kong remained home to the most expensive district in which to rent office space in the world – Central.
At that time, the vacancy rate within the office space market stood at 14.4% and rental values were expected to increase by 5% over the year.
This was due to the relief from internal conflict within the city, the lifting of pandemic lockdowns, and the opening of the border with the Chinese mainland, combined with increased demand from occupiers for the best-in-class office space.
Phases of the redevelopment of the circa 800-acre Kai Tak Airport site in Kowloon, as of July 2023, had already been completed.
Known as the Kai Tak Development (KTD), the scheme, on completion, was expected to deliver 30,000 housing units to accommodate a population of circa 86,000, and to provide government, institution and community (GIC) facilities, commercial areas and extensive open spaces.