Chinese firms seeking Hong Kong listings amid US hostility may help buoy flagging office rental market as space the size of Lippo Centre abandoned

Name: ‘No winner’ amid rising US-China tensions, says Hong Kong’s commerce chief Edward Yau
Uploaded: 2020-07-16T00:30:10.000Z
Duration: 12 min 13 s
Description: ‘No winner’ amid rising US-China tensions, says Hong Kong’s commerce chief Edward Yau

Mainland firms embarking on secondary stock listings in the city amid rising tension between Beijing and Washington may absorb some of the pain as abandoned office space soars to 18-year high

In first half of 2020, tenants bailed on 1.3 million sq ft of office space – the size of Admiralty’s Lippo Centre – as they tried to cut costs to stay afloat

4-MIN READ4-MIN

JLL predicts Central office rent will fall by up to 30 per cent this year as the amount of vacant office space continues to rise. Photo: Reuters

Lam Ka-sing

Published: 8:30am, 16 Jul 2020Updated: 8:44am, 16 Jul 2020

Companies are giving up their office space in Hong Kong at an almost unprecedented rate as the economy tanks in the wake of Covid-19, which piled further misery on top of the city’s year-long political crisis.

But observers say there is a glimmer of hope for the world’s most expensive office market: mainland Chinese firms setting up shop as they embark on secondary stock listings in Hong Kong amid rising tension between Beijing and Washington.

With the Trump administration pushing legislation that could lead to delistings of US-traded Chinese companies, some firms are gearing up for secondary stock offerings in the city to fend off the threat. Gaming company NetEase and JD.com, China’s second-largest e-commerce platform, have recently spearheaded the expected stampede by debuting in Hong Kong.

“Secondary listings of mainland firms on the Hong Kong stock exchange are expected to lead a pickup in leasing demand in the city,” said Alex Barnes, head of markets at JLL. “Although it may not immediately result in these companies taking on large office spaces, the downstream business opportunities for ancillary finance and business services will support overall growth.”

Some mainland Chinese tech heavyweights, including the Post’s owner Alibaba and ByteDance, have recently committed to new leases of large swathes of premium office space in Hong Kong.

It may not be enough to counterbalance surging vacancy rates.

12:13

‘No winner’ amid rising US-China tensions, says Hong Kong’s commerce chief Edward Yau

The amount of surrendered space – offices vacated by occupants before their lease expires – in Hong Kong is at an 18-year high as multinationals elect to downsize their footprint in the city.