TMT firms drive the Hong Kong and Beijing office rental markets
Technology, media and telecoms sector the biggest driver of demand for space, say property agents, as growth in investment banking slows
The fast-growing technology, media and communications sector is taking a significantly larger share of the total office leasing market both in Hong Kong and Beijing, according to property consultants.
"The trend started in Hong Kong in the second half of last year, and the sector has become a new demand driver as expansion by investment banks slows," said Andy Yuen, director of office agency for property consultancy DTZ.
"Apart from recent expansion by the popular names, there are some new names coming as well. The sector has become strong, particularly as others grew weak," he said.
According to DTZ, the TMT sector accounted for 15 per cent of office take-up in Hong Kong in the first three quarters.
Total space taken up by the sector in nine leasing deals concluded in the first three quarters amounted to more than 190,000 sq feet .
In Beijing, the TMT sector only began to emerge as a major occupier of office space last year , according to DTZ. In the first three quarters of this year, TMT tenants took up 77,000 square metres of space, or 20 per cent of the total office leasing space taken up over the period.
"There were a total of 29 deals, some of which were large. But there were also several small deals," said Andrew Ness, DTZ's head of research, North Asia
Leasing deals done in Hong Kong included the relocation by French global mobile phone manufacturer Alcatel Lucent into an 8,600 sq ft flat in Prosperity Millennium Plaza, Quarry Bay; and search engine Google, which took a three-year lease on an expanded 19,600 sq ft space in Times Square, according to international property consultant CBRE.
Networking websites relocated from a business centre in Causeway Bay to a 16,481 square foot floor in Hysan Place in Causeway Bay, according to Knight Frank.
Sources said some of the space was let for more than HK$70 per sq ft per month.
CBRE said in a report that activity in the TMT sector pushed up average rents in Causeway Bay by around 9 per cent quarter-on-quarter.
"These companies have been expanding faster than any other sector. As is the case in overseas markets, they have become the demand driver in the office sector," said Paul Yien, regional director of property consultancy Jones Lang LaSalle.
Yien said the TMT sector would continue to grow and would help boost the potential for rental growth in the Wan Chai-Causeway Bay area and in Quarry Bay, rather than Central, where rents are already higher than new tenants are willing to pay.
At the end of August the average office rent in Central was HK$89 per sq ft, versus HK$55 per sq ft in Causeway Bay, and HK$41.80 per sq ft in Quarry Bay, Yien said.
TMT companies are paying monthly rents ranging from HK$30 to HK$50 per sq ft for offices in the Wan Chai-Causeway Bay area and Quarry Bay.