New World Development plans US$3.2b ‘emerging industrial cluster’ in Kowloon West

New World Development is planning to invest an estimated HK$25 billion (US$3.2 billion) to create an “emerging industrial cluster” that will feature co-working concept developments in Kowloon West designed to woo innovative technology start-ups.

The developer, chaired by Hong Kong’s third richest family of Henry Cheng Kar-shun, unveiled the plan after it successfully acquired a business site for HK$2.97 billion (US$397.2 million) in Cheung Sha Wan by government tender last week, raising its land bank in the area to 2.1 million square feet.

“Hong Kong developers have to be more creative in their new developments in response to the global trend of the co-sharing economy,” said Stanley Wong, executive director of capital markets at CBRE.

For instance, monthly rental expenses for a 20,000 sq ft grade-A office building in core Central would cost HK$190 per sq ft, or HK$3.8 million.

“Not many corporates can afford such high rental expenses. We have seen an increasing number of big corporates like banks and insurance companies relocate part of their operations to co-working offices as a way to save costs,” he said.

CBRE ’s Asia Pacific 2017 Occupier Survey showed 64 per cent of multinational corporations occupiers plan to use some form of third party office space, including co-working space, by 2020. Cost savings was cited as a driver, followed by leasing flexibility and collaboration.