Serviced offices face expat influx

PUBLISHED : Monday, 06 December, 2010, 12:00am
UPDATED : Monday, 06 December, 2010, 12:00am

Indications that Western companies expect to post more staff overseas in the next five years, particularly to China, will come as good news to the serviced office sector.

International business centre Regus, for one, has had its appetite for market share whetted after commissioning a research report by the Economist Intelligence Unit into the placing of expatriate staff abroad.

Almost four out of 10 (39 per cent) of the 418 senior executives with responsibility for overseas operations said expansion abroad was in the pipeline. Business centre providers in Hong Kong, who already cater to expat-run companies, will be buoyed by this prospect.

The most popular destination for all expat staff, most of whom are from European or North American companies, is China, with 35 per cent of respondents rating it as one of the top three destinations for managers.

Serviced office providers in Hong Kong have long been used to working with a variety of nationalities and say more overseas companies favour a trial period in a business centre before committing to a longer lease or more permanent premises.

Lavender Chan, centre manager at Park Avenue Serviced Office in Queen's Road, says the local market is expecting more interest from overseas companies. She says the general tenant profile at the Central location consists of 35 per cent expats, with the remainder from Hong Kong or the mainland.

Chan says pressure on corporate costs and less quantifiable factors, such as settling in staff and being able to book a serviced office on a trial basis, have worked positively for business centres. The days of the hefty expat package with housing and travel allowances are largely over, according to the survey, as overseas companies choose business centres and serviced apartments for expat staff.

More junior staff, usually in their mid-20s, are also being selected to work overseas. This age group usually doesn't have the problem of uprooting families and relishes overseas postings. A PricewaterhouseCoopers' study from 2008 also suggests expat serviced office tenants could be getting younger: out of 4,200 graduates in 44 countries, 80 per cent said they wanted to work abroad.

'Because they want to settle in and find out about a new place, many companies take a serviced office for a temporary or trial period and later find their own office,' says Chen, adding that Park Avenue's Hong Kong location is at full capacity, with only its boardroom-style conference facility available.

If Park Avenue's overall expansion and refurbishment plans are anything to go by, the brand is well positioned to corner a slice of this expat market. The Singapore-headquartered company recently spent HK$14.8 million on refurbishing Park Avenue offices, which also have locations in Shanghai and Jakarta. The company also operates hotels and serviced apartments.

As Regus, one of the top three business centres globally, plans its future strategy, it believes serviced offices will be an important factor when decisions are made on posting staff abroad.

'This survey shows that globalisation is forcing companies to review their approach to where they locate their operations and how they manage human resources and property,' says Mark Dixon, global CEO.