Hong Kong regulator begins an unusual savings plan to raise HK$1 billion to afford owning an office in the world’s costliest city

The regulator opted to move out of Central to save up to HK$1 billion in rental expenses over eight years to buy its own property

With the savings, the options available to the SFC are Island East or Kowloon East based on current prices, agents say

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Aerial view of Hong Kong's Central district on 27 September 2018. Photo: SCMP/Winson Wong

Published: 3:16pm, 19 Feb 2019Updated: 9:54pm, 19 Feb 2019

Hong Kong’s securities regulator has revealed an unusual savings plan, aiming to raise up to HK$8 billion (US$1.02 billion) over eight years to afford owning its own office in the world’s most expensive city.

The watchdog, which will relocate its premises to Swire Properties’ One Island East tower in Quarry Bay when its Cheung Kong Center lease in Central expires next year, has found that its HK$3 billion budget was insufficient to buy an 180,000-square foot (16,700 square metres) office to house its 900 staff, said the Securities and Futures Commission (SFC) chairman Tim Lui Tim-Leung.

“We have not given up the plan to buy our property,” Lui said in his annual report to the Financial Affairs Panel of the Legislative Council (Legco), as the city’s legislature is called. “We signed an eight-year lease [in Quarry Bay] which will be 50 per cent cheaper than in Central. The relocation plan will save us HK$1 billion in total rental expenses over eight years.”

The SFC’s plan underscores how Hong Kong’s runaway property prices have risen beyond the affordability of most businesses, even driving the regulatory agency of one of the world’s wealthiest governments from prime real estate.

Grade A offices cost between HK$92 and HK$192 per square foot to rent in November, selling for between HK$38,000 and HK$50,000 per sq ft, according to Knight Frank. Rental charges are expected to rise by anther 5 per cent this year, according to Nomura Research, while sales prices are also likely to increase, agents said.