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SCMP Reporter

THE Tsim Sha Tsui office market is undergoing a shift as a new breed of companies looks to cash in on the area's growth potential.

  Financial services and related companies are showing an increased interest in the area, whose traditional base has been garment and toy trading firms.

  Steep rent rises in Central and the prospect of new high-quality space coming on stream, are combining to increase Tsim Sha Tsui's appeal.

   The West Kowloon reclamation and the Western Harbour Crossing will also enhance the area's long-term growth prospects, encouraging financial and service firms to establish a presence there.

  Standard Chartered Bank, Sanwa Bank and American International Assurance (Bermuda) have all leased space in Tsim Sha Tsui recently.

  Standard Chartered and Sanwa have taken space in Miramar's Park Lane Square, while American International Assurance (Bermuda) has signed a four-year lease at Sino Land's Empire Centre in Tsim Sha Tsui East.

  Analyst Adam Osborn, of Barclays de Zoete Wedd, said cost was a prime consideration in companies' decisions to move into Tsim Sha Tsui.

  ''They will go when it is financially worth moving,'' he said.

  While Central rents are edging towards $60 per square foot, typical Grade A net rentals in Tsim Sha Tsui range from $36 sq ft to $42 sq ft.

  ''The gap has widened and it will probably continue to widen,'' Mr Osborn said.

  ''Decentralisation is going to be a running theme, particularly now that the products are there in the decentralised areas.''   In the longer term, Hong Kong would see the emergence of mature decentralised office markets in areas such as Kowloon Bay and Kwai Chung, he predicted.

  The increasing quality of office buildings across Hong Kong is a major factor in the trend.

  ''People have realised it is no longer enough to just build space. You are going to have to give them the right products,'' Mr Osborn said.

  A significant amount of new Grade A supply will come on stream in Tsim Sha Tsui in the next 18 months.

  In addition to the 450,000 sq ft of office space at Park Lane Square, Wharf's Gateway Towers will provide 1.2 million sq ft by mid-1994 and Cheung Kong's Concordia Plaza will add another 715,000 sq ft in Tsim Sha Tsui East by the end of next year.

  Michael Green, director of S. G. Warburg Securities, said many firms were looking to take advantage of the expanding market in Tsim Sha Tsui.

  ''Over the next five years, one will probably see Tsim Sha Tsui evolve substantially and quickly,'' Mr Green said.

  ''A whole lot of things are coming together at once: higher supply of office space, far higher quality of office space and improved infrastructure.

  ''The West Kowloon reclamation is going to give rise to a considerable increase in business over the next five years or so.

  ''Many companies, particularly in banking and the like, would obviously like to have their feet firmly on the ground in these locations.

  ''The structure of the market has changed and will change, in the same way the Wan Chai/Causeway Bay market changed.

  ''We had a large increase in supply but, at the same time, over the past few years or so, the increase in average rentals has been higher than in Central, admittedly off a lower base.''   Companies were prepared to pay higher rentals because the new buildings were much more sophisticated.

  Richard Watton, associate director of Richard Ellis, said trading companies made up about 75 per cent of the tenants in Tsim Sha Tsui.

  ''That is starting to change. We are starting to attract service companies more into Tsim Sha Tsui,'' he said.

  ''I think you will see that, because of the pressure [of space] on Hong Kong island and better quality buildings in Tsim Sha Tsui, there will be a shift in the balance and a broader cross-section of tenants from now on.'' 



New breed looks to make profit in TST