Hong Kong’s future economic growth will rely on arrival of companies from China
Chinese firms are putting employees and offices in Hong Kong and then expanding,which is good news for the city’s economy
The fate of Hong Kong, whose economy has been bolstered by tourists from China for the past 10 years, will depend on mainland companies for its future growth, according to a real estate private equity fund based in the city.
Andrew Moore, chief executive and a founding partner at Pamfleet Group, said Hong Kong has seen its share of ups and downs over the past 20 years such as concerns over the handover in 1997, competition with Shanghai and the outbreak of severe acute respiratory syndrome.
It was in 2003 when the Chinese government encouraged its residents to travel to Hong Kong alone, Moore said, adding that the policy improved the city’s property market and overall economy.
The Individual Visit Scheme began on July 28, 2003. It allowed Chinese tourists to visit Hong Kong and Macau on an individual basis. Before the scheme, such visits could only happen under business visas or as part of a tour group. But the positive impact of their arrival has been diminished by the rising conflicts between Hong Kong residents and the travellers.
However, while Moore is still optimistic about Hong Kong’s outlook, he said this time the driver would be mainland companies, which are setting up offices in Hong Kong.
‘I would say office demand at the moment is very strong, helped by genuine demand from mainland Chinese companies,” Moore said.
“They are not investors. They are putting employees and offices in Hong Kong and then expanding,” said Moore. That is a positive news for the city’s economy.
The wave of new offices in Hong Kong has boosted demand in the property sector.
Companies from China spent a combined HK$18.35 billion on two office buildings in Hong Kong in November last year, setting benchmarks for the local property market.
JLL expects more Chinese capital to make its way into the local property market this year. The vacancy rate in Central remained at a low 1.2 per cent at the end of November, also helped by demand from mainland firms.
Moore said these mainland companies would focus initially on the Central business district but eventually diversify to decentralised areas, taking up future office supply in Hong Kong.
Pamfleet provides real estate investment and asset management services from its offices in Hong Kong and Singapore. The company specialises in identifying underperforming buildings and repositioning them to add value through refurbishment.
“In the past 10 years (Hong Kong has relied) on mainland visitors. In the next 10 years we will rely on (mainland) companies with very smart and educated people,” Moore said.
“This is why after 20-plus years, I am still an optimistic developer.”