Hong Kong is an increasingly powerful magnet for mainland Chinese companies which have been moving into Central district in greater numbers.
The trend is sparking soaring rents, forcing some western investors into cheaper venues for their business, according to the Wall Street Journal.
Despite China’s stock market tumult this year, mainland banks and asset managers are crowding into Central in hopes of drumming up new business with foreign clients.
The moves are further cementing Hong Kong’s status as the prime gateway into and out of China, property experts and bank analysts say.
The shift “[is] part of the grander plan with regards to the strategy of the government for financial institutions and corporates to go global,” said Jonathan Cornish, head of bank ratings for North Asia for Fitch Ratings, who has tracked the expansion of Chinese banks in Hong Kong.
“Hong Kong is a very obvious launching pad for them to do that.”
Mainland China firms have had a presence in the former British colony.
Bank of China opened its first Hong Kong office in 1917 and now occupies the I.M. Pei-designed Bank of China Tower.
In the early 2000s, the four largest state-controlled banks listed on the Hong Kong stock exchange and took nearby office space, sometimes whole buildings.
Now smaller commercial banks are expanding, driven in part by a program that began this summer allowing money managers to sell funds across the mainland border and in part by Hong Kong’s status as a major clearing center for transactions done in yuan as China pushes to have the currency used more widely in global payments.
Beijing-based China Minsheng Bank recently signed a lease for an entire floor at Two IFC, the city’s second tallest high-rise, according to real-estate services firm Jones Lang LaSalle.
Bank of Shanghai took a floor at Citibank Plaza, according to services firm CBRE Hong Kong.
Xiamen International Bank recently expanded its office at Two Exchange Square in Central while China Bohai Bank and Bank of Dongguan also took up smaller representative offices nearby, according to Paul Louie, a Barclays property analyst. Xiamen declined to comment.
In all, the number of mainland companies in Hong Kong jumped 14 percent to a record 1,091 in June from a year earlier, the fastest pace in a decade, according to an annual survey compiled by Invest Hong Kong, a government department set up to attract foreign direct investment, and Hong Kong’s official statistics agency.
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