Capital-rich Asian banks, in particular some state-owned mainland firms, have emerged as prime contenders for top-end office space in the heart of Hong Kong's financial district, replacing some Western banks on tight budgets that are keen to cut costs.
Singapore's United Overseas Bank (UOB) recently signed a new lease to occupy more than 30,000 sq ft in Citibank Plaza at 3 Garden Road in Central, one of the biggest office complexes in the city, according to property agents familiar with the deal. The floor to be taken by UOB used to be office space for a major American bank in Hong Kong.
UOB is not alone in the latest wave of financial industry competition for top-end office space in the city. China Securities (International), a mainland brokerage partly owned by China Investment Corp - the mainland's sovereign wealth fund - recently expanded its Hong Kong office at Two Exchange Square in Central from the existing 6,602 sq ft to the entire floor of about 13,000 sq ft, property agents said.
When asked about UOB's office expansion plan in the city, its Hong Kong chief executive, Christine Ip, told the South China Morning Post: "We are hiring, so we need additional office space to accommodate our growing number of staff.
"We are keen to expand our regional presence, and the move is part of our organic growth strategy and demonstrates UOB's long-term commitment to Hong Kong as the financial hub for the Greater China region."
Industry sources said UOB currently housed its staff in Hong Kong in several locations, including its main office in Gloucester Tower, Central. UOB in Hong Kong has less than 30,000 sq ft of office space at present. The sources said UOB would pay rent of around HK$70 per square foot for its new, bigger office. Ip declined to comment on any financial details about the bank's new office lease.
Meanwhile, several mainland banks, including Shanghai-headquartered Bank of Communications and Beijing-based China Minsheng Banking Corp, are keen to find large amounts of office space in Hong Kong, especially when it is accompanied by naming rights for office buildings, according to property agents.
"The sizes of offices for many mainland firms in Hong Kong could be doubled or even tripled in two to three years," said Alan Lok, the executive director of office services at property agency CBRE.
In contrast with Asian firms' expansion plans in the city, several major international financial institutions have gradually moved their Hong Kong offices out of Central since the global financial crisis, due largely to cost concerns. For example, Royal Bank of Scotland, which once occupied seven floors at Cheung Kong Center, a landmark building in Central owned by Asia's richest man Li Ka-shing, now has most of its staff in Quarry Bay.
Some foreign banks are not only scaling back in Hong Kong but also in other Asian cities. For example, Barclays, the second-largest British bank by assets, decided to give up two storeys of its office space in Singapore's financial district. Last week, Barclays announced it would cut 14,000 jobs across the group.