Service with a big smile
Serviced offices are tipped to perform well this quarter, supported by pent-up demand for office space, the ease of setting up a company in Hong Kong and new small and medium-sized companies arriving from Europe that want to exploit opportunities in the city and on the mainland.
'It is a matter of fact that Hong Kong office rents are the highest in the world. With rents in grade-A commercial buildings continuing to rise, the demand for more cost-effective serviced offices is pushed up,' says Paul Salnikow, chief executive of The Executive Centre.
He says his six centres in the city are all nearly full.
The situation is the same in Hatton Offices, a smaller boutique serviced office in Central. 'We get lots of inquiries from Europeans, especially French companies that want to explore opportunities here. Hong Kong is the stepping stone to doing business in China,' says director Andrew Tse.
The serviced office concept has really taken off in Hong Kong in the past 10 years, with new companies and many new offices entering the market.
For newly registered companies, flexibility is the main attraction as they can operate efficiently and sustain their competitive edge by reacting quickly to changing market conditions.
'With the economy being still so uncertain, the key to success nowadays is in finding short-term solutions rather than risking investment in space in the long term,' Salnikow says.
He points out that companies intending to move into a new city need four to five months to set up a new office because they have to deal with renovation, IT requirements, furnishings and so on. Serviced offices take just a few days to a week to be ready for business.
Value-for-money service is another attraction that new companies notice.
Salnikow says: 'The combination of a prestigious business address, cost-saving efficiency, quality support staff, low start-up capital and environmental consciousness is highly appealing, not just to dynamic start-ups but also to businesses right across the board.'
Hong Kong office occupancy levels have been about 95 per cent for several years and this situation is likely to continue this year and beyond, as very few office buildings are coming online in key areas.
With limited new supply and serviced offices' increasing popularity, Salnikow is planning to expand his network from 46 to 50 centres across Asia.
Salnikow forecasts that while the demand for conventional offices will gradually pick up at the first sign of global risk reduction, the buoyant demand for fully furnished, ready-to-use offices will remain high given that companies need to quickly adapt to market situations and capitalise on opportunities.