How Hong Kong's super pricey offices could hurt the city's business hub status

Will emerging office hubs save the city?

According to Colliers International's "The Evolution of Office Space in Hong Kong," Hong Kong’s Central district continues to be the most expensive place in Asia to rent office space.

However, the high occupancy cost could ultimately weaken the overall competitiveness of the city as a business location. In this regard, a new wave of office development will accommodate future economic growth.

Here's more from Colliers:

There are a number of new business locations evolving in Hong Kong over the next 10 years. We have highlighted several districts, including Island East and Kowloon East, believing there is potential for them to emerge as core office locations for most industry segments, including professional services and banking and finance.

Although Kowloon East has been earmarked by the government as a key office location for the future, the market will first develop along Hong Kong Island before making an eventual jump across the harbour.

The improved transport connectivity between decentralised areas and the rest of Hong Kong will surely lead to higher rents in those areas, resulting in a narrowing rental gap between core and non-core districts.

In other words, the pace of rental growth in the non-core locations of Wan Chai and Causeway Bay, Island East and Kowloon East will outperform the core district of Central over the next decade.

Supported by the completion of the Central-Wan Chai bypass and Island Eastern Corridor Link, due in 2017, the rental growth of key business districts on Hong Kong Island, including Wan Chai, Causeway Bay and Island East, will outpace Kowloon East.

However, Kowloon East is likely to witness stronger take-up than Hong Kong Island, due to the sizable volume of new supply in the district, where it can offer major cost savings for occupiers.