On the move: Hong Kong East provides compelling deal for Central clients
Grade A offices in Hong Kong East are 50 to 60 per cent cheaper than in Central, while most buildings are more modern
Build, and they will come – if the prospect is attractive enough. In Hong Kong East, a programme of redevelopment is drawing swathes of businesses from Central, with demand for accommodation – particularly serviced apartments – rising in tandem.
Alex Barnes, JLL’s head of Hong Kong markets, regards a complete or partial relocation to areas such as Quarry Bay, Taikoo Shing and North Point as an obvious consideration for occupiers.
In Hong Kong East, he explains, rent for grade A offices is 50 to 60 per cent cheaper than in Central and the majority of buildings less than 20 years old, unlike many of Central’s most expensive buildings. Barnes foresees that rents will remain at a discount compared to Central in the near term, to attract traditional Central-based businesses, and owing to consistent, large-scale supply entering the market in Kowloon East.
The Wan Chai-Causeway Bay bypass, scheduled to open in 2018, will cut travel times to the Airport Express and IFC in Central to eight minutes “and this will likely spur more relocations”, Barnes expects. Increased accessibility to some of Hong Kong Island’s largest floor plates will accelerate a growing view that Hong Kong East can be an acceptable front office location, he adds.
A natural consequence, says Ingrid Cheh, associate director of research department at JLL, is increasing demand for quality accommodation in the area.
“The influx of new businesses in Island East will definitely be a demand driver for quality accommodation. Besides Island East, districts like Kowloon East [Tseung Kwan O, Yau Tong and Kwun Tong] are also expected to benefit,” Cheh says.
The market has already seen more leasing inquiries in non-traditional districts along the MTR lines, such as Island East and Kowloon East, due to the relocation of offices and because these districts offer more affordable rental options. “Over on Kowloon side,” Cheh says, “the opening of new international schools, such as French International School’s Tseung Kwan O campus, have also triggered more inquiries for residential properties in the eastern part of Hong Kong”.
Serviced apartments are noticing this trend. Joyce Lee, general manager – leasing and management at Kornhill Apartments in Quarry Bay, attributes the potential identified in Hong Kong East to a major upgrade of the Hang Lung Properties-owned Kornhill Plaza commercial complex.
“Twenty-three new retail brands and six restaurants were introduced to the mall last year to provide our customers and serviced apartment residents with more diversified offerings,” Lee says. Following the launch of the refurbished Aeon Style lifestyle department store last year, the Grand Kornhill Cinema opened in April 2017 to offer more hi-tech entertainment.
These new lifestyle amenities are virtually on the doorstep of Kornhill Apartments, where 450 units range from studio flats to one-, two- and three-bedroom suites.
“The range of offerings from daily necessities to a wide selection of merchandise at Kornhill Plaza is another reason why people find Kornhill Apartments appealing, making it one of the best choices of serviced apartments for corporate clients and expatriates in the area,” Lee says. “We have a mix of short- and long-term residents, covering families and corporate clientele.”
The property’s location atop Taikoo station benefits from the MTR convenience. Resident facilities include a third-floor leisure area, gym, indoor pool, sauna, steam room and jacuzzi, along with multiple sporting courts and table tennis area. Parking space is also provided at Kornhill Plaza.
Swire Properties’ premium serviced residence Taikoo Place Apartments, opened in 2015, expanded that developer’s core investment portfolio in Quarry Bay. Swire views Taikoo Place as one of Hong Kong’s best-planned business hubs, fusing commerce, entertainment and culture. Its luxury apartments “create an exceptional urban living experience with easy access to every corner of Hong Kong”.
With interiors designed by New York-based firm Richardson Sadeki, the 28-storey tower comprises 111 suites furnished in contemporary style, offering studios, one- and two-bedroom suites as well as elegant penthouses.
Many suites include balconies overlooking Victoria Harbour and the Kai Tak Cruise Terminal, or offer views of the city. Residents can enjoy a private lounge, luxury clubhouse, gym, private spa with steam rooms, outdoor dining terrace and 24-hour concierge service.
With short-term assignments still popular among multinational corporations, and the continuing decentralisation of Island East, JLL’s Ingrid Cheh expects to see more people looking for flexible accommodation in and around Quarry Bay.
She notes that the lifestyle elements continue to improve – Swire’s redevelopment plans in Quarry Bay “should provide a significant improvement on the streetscape as well as the lifestyle amenities and F&B provision”.
According to Barnes, Swire’s plan calls for the development of two towers: the 48-storey One Taikoo Place, due for completion in 2018; and the 42-storey Two Taikoo Place, scheduled to open in 2021. These buildings will be surrounded by landscaped gardens, water cascades and dining areas. More alfresco dining, parks and serviced apartments are being developed, he says.
“Swire has huge influence over a lot of the streetscape, F&B, and amenities in the area. This is noticeable at street level due to the sheer volume of ground floor and alfresco dining, which provides a user experience that is hard to replicate.”
Aside from these options, Cheh adds, there is also a light provision of prime shopping centre supply nearby, including two phases of Harbour North retail development by Sun Hung Kai Properties (about 145,000 sq ft) from 2017/19.
Hospitality providers are planning for the influx. The Hong Kong Tourism Board forecasts that more than 24,000 hotel rooms will be delivered to Hong Kong East from 2017-20, among them Hotel VIC in North Point with 671 rooms, and CK Property’s Oil Street project in North Point, with 840 rooms. Given the trend to serviced apartment living, “some of these hotels will likely reserve a portion of rooms as long-stay hotel suites”, Cheh believes.