The cross-border agreement will have a broad-based, rather than a direct, impact on the commercial real-estate sector The Closer Economic Partnership Arrangement (Cepa), to take effect from January 1 next year, is likely to have a broad-based, as opposed to direct, impact on the local office market, say industry insiders. 'Everyone in the industry is excited about the prospect of Cepa,' said Keith Futcher, managing director, EastPoint Property Management. 'It is a significant step forward and will be beneficial for trade between Hong Kong and the mainland.' Mr Futcher is positive about the arrangement and the potential benefits, only foreseeing that there may be a rush of applications leading to logistical problems, but it is by no means clear at this point. 'Cepa is full of pregnant promise,' said Mr Futcher, but he does not anticipate the agreement having a direct impact on the office market. The arrangement was signed to help established companies in Hong Kong enter the mainland market. It is possible that multinational corporations might take advantage of this by entering into mergers and acquisitions or joint ventures with local companies to 'piggyback' on local firms and may lead to a demand for more office space. What was really needed was a global economic recovery; that would help Hong Kong's own rebound and entail a better outlook for the office market, said Mr Futcher. 'Cepa is a positive statement by the Hong Kong government,' said Anthony Couse, international director and head of agency in Asia at Jones Lang LaSalle. He also stressed that there were no immediate effects from Cepa and they would not be apparent in the short term. 'In the longer term, Cepa has the potential to affect Hong Kong's office market but not directly,' Mr Couse said. 'It could turn out to be a driver of new demand for office space.' Besides multinationals, companies from Guangzhou and the Pearl River Delta region that had reached a certain critical mass might want to establish offices in Hong Kong, he said. 'At the moment Cepa is a good sentiment and a great statement of promise, but it is too early to say exactly how it will influence the Hong Kong office market,' he said. 'Perhaps in three to five years Cepa will affect the local office market and change the dynamics of market demand.' Andrew Ness, executive director of global research and consulting for Asia at CB Richard Ellis, agreed that Cepa was good for Hong Kong and would impact on trade in goods and services. Mr Ness also believed Cepa's effect would be broad-based and lead to growth in the import and export sector. This should lead to increased employment, especially in the financial and business services sectors, and ultimately help stimulate consumption. 'Now, Cepa is difficult to really translate. The broad-based impact should help boost the economy and create buoyancy in the market, which in turn should have a positive effect on the corporate sector. The feel-good factor increases and that's important,' he said. Cepa might also lead to more mergers and acquisitions but, ultimately, it would create a ripple effect - one factor that should help Hong Kong on the road to recovery - but Mr Ness cautioned that it would take time to filter through.