Not only is our retail sector highly dependent on mainland shoppers, our office sector too has become quite reliant on demand from mainland companies.
Already, mainland companies account for over a third of new lettings in Central, according to a report from property consultant JLL. Overall, they occupy about one-fifth of Central’s Grade A office space.
Retail properties have been hit hard amid a drop in Chinese tourist arrivals. Will the same situation occur in Hong Kong’s office market?
JLL thinks that won’t be the case.
Mainland companies are still expanding their overseas operations, with Hong Kong being a popular destination.
“As a regional financial and legal hub, Hong Kong plays a pivotal role in providing the professional services needed by mainland corporates to step foot into global markets, a trend we believe is only just getting started,” the JLL report said.
A notable example is the securities trading and asset management businesses, where supportive mainland policy plays a key role.
Development of the offshore renminbi market in Hong Kong, the stock connect scheme and more recently the mutual fund recognition scheme are all expected to keep driving mainland financial companies to the city, according to the report.
A growing cluster of mainland firms will in turn attract more foreign companies looking to do business with them, it said.
Against this backdrop, JLL said it is confident mainland firms will play a pivotal role in sustaining the near-term demand as well as driving the long-term growth of Hong Kong’s office market.
Mainland tenants are expected to lease up to 28 percent of Grade A office space in Central by 2021, up from 21 percent now, the property consultant said.
There are a couple of useful tips for landlords or agents on how to appeal to mainland tenants.
First to remember is they tend to prefer prime office buildings.
Second, they may start with leasing a small space (less than 5,000 square feet) but when the operation grows to a certain size (60,000 square feet) they typically prefer to own their offices to allow for long-term expansion.
Third, mainland firms care a lot about feng shui.
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