It’s hip to work in Quarry Bay, as foreign firms exodus Central
Swire, the biggest landlord in Quarry Bay, recently reported it has seen bumper numbers of high-profile tenants setting up offices in the area, having moved from Central Hong Kong
Quarry Bay is quickly becoming Hong Kong’s new hip business district, as mainland companies take over Central, and foreign firms leave in their droves.
As mainlanders continue to swoop on trophy buildings in Central, foreign multinationals are relocating to the east of Hong Kong Island, and this “decentralisation” has been the prominent trend in the office market, say leading property agents.
The latest findings from real estate services firm JLL show the total number of new lettings in Central is down 47 per cent month-on-month, with rents edging up 0.5 per cent month-on-month from February to March.
Property developer Swire is the biggest landlord in Quarry Bay, and recently reported it has seen bumper numbers of high-profile tenants setting up offices in the area, having closed their Central offices.
Among those new tenants are financial services companies Prudential, FWD Insurance and AllianceBernstein, and three leading international law firms.
Swire also says luxury brands such as Burberry and Gucci are also moving into its flagship development in the area, Taikoo Place, from Causeway Bay.
Don Taylor, a director at Swire Properties, said: “This whole theme of decentralisation in Hong Kong will continue, and kind of follows what other financial centres in the world have experienced.”
He said occupancy in Taikoo Place office development, for instance, is currently as high as 99 per cent, with rents there ranging between HK$40 and HK$50 per square foot. Rents in its flagship tower, One Island East, are slightly higher at HK$50 and HK$70 per sq ft.
But rent rises are still relatively flat compared with other areas, standing around 10 per cent higher than three years ago. Taylor’s clients tell him, too, that in general rental costs account for 10 per cent of total operation costs.
He now compares the growing appeal of eastern Hong Kong Island to that of Canary Wharf, the business district in east London which started developing some 20 years ago and which is now hugely popular, adding that the biggest challenge for both is changing people’s perception.
Swire has already invested some HK$15 billion redeveloping Taiko Place since July last year. Two triple Grade-A office towers are also currently being built there, each spanning a total gross floor area of 1 million sq ft in addition to 69,000 sq ft of open landscaped gardens. The two towers are expected to be completed next year and 2021, respectively.
“We are not just developing office buildings in isolation. It’s all about providing the necessary amenities to give companies confidence that if they relocate to a place like Taikoo Place they will still be able to attract and retain the best talent for their organisations,” said Taylor.
“Rental levels are in line with what we offer at One Island East. We have a lot of active negotiations going on at the moment,” he added.
In comparison with the new CBD being developed in Kowloon East, Taylor said Island East has the distinct advantage of being on the island, important still for the image of many organisations, and in an area where connectivity will be enhanced with the completion of the Central-Wanchai bypass.