The upcoming auction of three commercial sites in the Qianhai special economic zone in Shenzhen could help alleviate the severe shortage of office space in Hong Kong, according to property consultants CBRE.
The Qianhai Authority announced on July 5 that it would auction the three commercial lots with a combined gross floor area of 14 million sq ft - an area comparable in size to the existing grade-A office market in Central - at a combined reserve price of 14.92 billion yuan (HK$18.7 billion).
Two of the sites will go under the hammer on July 26 and the third on August 16.
In its latest Hong Kong Viewpoint report, CBRE said the 15 square kilometre Qianhai district, just an hour's drive from Hong Kong's core business district, could be complementary to the city.
The district has a total construction area of between 280 and 330 million square feet.
"Given that Qianhai is a testing ground for a more expansionary approach to the services sector, in which the financial sector and real estate play a key role, the advantages for Shenzhen in collaborating with Hong Kong seem clear," said Edward Farrelly, head of CBRE research for Hong Kong, Macau and Taiwan.
"There may also be scope to attract back-office operations, as many call-centre operations and accounting processing centres are currently located in Guangzhou."
Hong Kong office rents have been the most expensive in the world for the last three years, driven by high demand and limited new supply - a situation likely to grow more acute through the current decade, Farrelly said.
Despite the clear advantages offered by Qianhai, Hong Kong's low tax base, freedom of capital movements, legal system and large pool of skilled executives are among the many reasons that its status as the key regional hub for commercial headquarters is not under threat, the CBRE report concludes.