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Microsoft will move its 250 Hong Kong employees to Cyberport in October, giving the controversial project a much-needed boost and positioning the company to forge closer ties with the Government.

Microsoft Hong Kong general manager Mark Phibbs said the move was a commitment to Cyberport and the SAR's efforts to become an information technology hub for the Pearl River Delta.

'We said we would be an anchor tenant in Cyberport and we believe in living up to our commitments. We share the Government's vision of creating a knowledge-based economy in Hong Kong,' Mr Phibbs said.

Microsoft signed a five-year lease on 40,000 square feet in phase one, taking up two floors in the 10-storey building. All of the company's Hong Kong employees will move, vacating the two floors in City Plaza 3 and 4 they have occupied for the past decade.

Detailed financial terms of the lease were not released, but Carrie Yau Tsang Ka-lai, the Secretary for Information Technology and Broadcasting, said Microsoft paid between HK$11 and HK$13 per square foot.

Mrs Yau would not say how many rent-free months were given.

There had been concern that the Government would resort to lowering rents to increase interest in Cyberport after only three companies were on the tenant list when the development opened in April, including project developer Pacific Century CyberWorks, which occupied three floors.

However, Mr Phibbs said the rental rate was not a factor in the decision to move. He said Microsoft saw the move as a strategic one that would, among other things, help the company become more involved in the potentially lucrative e-government projects the SAR has been promoting under the Digital 21 strategy.

He praised the campus-style atmosphere of Cyberport, likening it to Microsoft's headquarters in Redmond, Washington, and said the company had looked at other options before making a decision.

With yesterday's announcement, Mrs Yau said 80 per cent of the available space in the first phase of Cyberport had been leased.

'The fact that we were able to lease out 80 per cent of the space during an economic downturn is not a bad report card,' she said.

Mrs Yau said another three unnamed companies had leased space, but had yet to announce their plans. Based on the space taken by other companies, they would occupy about one floor between them.

Cyberport will include 1.1 million sq ft of offices, a 270,000 sq ft commercial centre and a hotel. It is to be completed by the end of next year. A residential development of 2,800 luxury flats will be completed between 2004 and 2007.

Mr Phibbs said Microsoft's decision should be seen as a challenge to other large multinational technology firms such as Oracle who committed to the project during the technology boom by signing letters of intent, but have since become less enthusiastic.

While Microsoft had been in active discussions with senior government officials, including Chief Executive Tung Chee-hwa, Mr Phibbs said there had not been undue pressure put on the company to move.

'We had detailed discussions, but there was no pressure,' he said.

In a statement, Mr Tung said attracting a major company such as Microsoft was a significant achievement for Cyberport. 'The presence of such an international leader at Cyberport will draw other companies to come to work with us.'

The other two tenants are United States-based General Electric Information Services and Finnish telecommunications company Sonera, with one floor each.



Microsoft signs Cyberport lease