What is the formidable CNN afraid of in Hong Kong? Well, it just seems to be this: the ever-rising property rental costs.
For 18 years, the global news network has operated out of Taikoo Place, settling down comfortably in a key hub for foreign media and technology firms in the eastern part of Hong Kong Island.
But now it is said to be opting for a new location in a different part of the island, apparently in a bid to cut down on its rental bill.
Apple Daily reports that Time Warner, the parent of CNN, picked Wong Chuk Hang in the island south as the location for the media giant’s new regional headquarters.
It is believed that CNN is paying some HK$330,000 per month for space at 41 Heung Yip Road, a property owned by Angela Leong, the fourth wife of Macau casino king Stanley Ho.
The new office will be around 11,744 square feet in size, roughly the same as the US media titan’s current Hong Kong headquarters that are spread over 12 floors at Oxford House in Taikoo Place.
Although the space will be similar, the new facility is expected to yield savings of close to HK$3 million a year for CNN’s corporate parent, with rental costs cut by some 40 percent.
In 1999, Time Warner took up the top 12 floors of Oxford House from Swire Properties at HK$15 per square foot per month, or about one third of the current going rate of HK$50 in that tower.
The move to Wong Chuk Hang, a former industrial estate that is turning into a vibrant office and art gallery scene in close proximity to Ocean Park, will put CNN somewhat closer to the central district.
The office is three minutes commute from the new Wong Chuk Hang station, which is about 14 minutes away from Central.
In comparison, it takes 15 minutes (and at least a 10-minute walk from Quarry Bay station to Oxford House, given the never-ending renovation work in Taikoo Place) to travel from Central to Quarry Bay, where the existing office is located.
Rising office rental costs in Hong Kong are putting pressure on many corporates, forcing them to rethink their property lease arrangements.
Prices are getting inflated due to the entry of mainland financial firms into Hong Kong and the aggressive bidding of Chinese property firms for available property.
Amid this situation, even top global investment banks are forced to split their offices, shifting their back office operations away from the core financial district.
In May, Henderson Land paid US$3 billion (HK$23.28 billion) for a Murray Road property in Central, making it the world’s most expensive commercial site in terms of per-square-foot cost.
In case you are wondering, the cost worked out to over HK$50,000 per square feet.
Among the tier-one foreign media firms, only Bloomberg and Financial Times still have all their operations in the Central financial district.
Interestingly, both those financial media firms have procured their space from entities controlled by tycoon Li Ka-shing.
Bloomberg has made its home at the Cheung Kong Centre at 2 Queen’s Road Central, while FT has its offices in The Centre which is located at No. 99, Queen’s Road.
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