Hong Kong’s position as Asia’s commercial capital and regional business hub has led to a steady increase in the number of business establishments that are set up here every year. Consequently, there is a strong demand for office rental space that has resulted in soaring rental costs. According to Colliers International’s Global Office Real Estate Mid-Year Review (June 2009), Hong Kong is the world’s most expensive place to rent an office. Despite such sky-high office rental costs, Hong Kong’s major business districts continue to face a growing demand for office space from a large number of new firms.

As with other cities, the office rental costs in Hong Kong depend upon two primary factors – the office location and the building grade. While certain prime districts such as Central, Wan Chai and Causeway Bay command a higher rental fee, other areas such as Island East offer more affordable office rental options. Grade A buildings command a higher rental fee as compared to Grade B or Grade C buildings. Grade A buildings are modern with high quality finishes. They have large floor plates; spacious, well-decorated lobbies and circulation areas; effective central air-conditioning; good lift services zoned for passengers and goods deliveries; professional management and parking facilities. Grade B buildings are ordinary in design with good quality finishes. They have average-sized floor plates; adequate lobbies; central or free-standing air-conditioning; adequate lift services; good management; and parking facilities may or may not be available. Grade C buildings are plain with basic finishes. They have small floor plates; basic lobbies; no central air-conditioning; barely adequate lift services; minimal to average management and no parking facilities.

This article provides useful information on renting an office space in Hong Kong’s major office districts.

Major Office Districts in Hong Kong

Hong Kong is divided into three geographic regions: Hong Kong Island (the financial and administrative center of Hong Kong); Kowloon Peninsula (one mile away from Hong Kong island) and the New Territories (also known as the outlying islands).

Most of Hong Kong’s major office districts are located on Hong Kong Island; these include Central, Sheung Wan, Admiralty, Island East, Wan Chai and Causeway Bay. The major office district on Kowloon Peninsula is Tsim Sha Tsui. The major districts are described below.

Central

Originally known as Victoria, Central is the financial and administrative center of Hong Kong and is located on Hong Kong Island. It is Hong Kong’s most sought after area for leasing office space. Central’s tenant profile includes banks, legal firms, financial institutions, insurance companies, trading houses, business centers, MNCs and professional services firms. Central is the Manhattan of Hong Kong and it has the highest concentration of Grade A buildings. Central offers easy access to transportation services, hotels and eateries. Hong Kong’s famous Star Ferry links it to Kowloon. The ferry piers also service Macau and Hong Kong’s outlying islands. Central also has a terminus for the Airport Express; Hong Kong’s convenient and fast subway service that connects the airport and Hong Kong. Using Airport Express, business travelers can now reach the Hong Kong Airport from Central within 25 minutes. Some of Central’s famous buildings include the AIG Tower, Citibank Tower, Entertainment Building, Bank of China Tower, Two International Finance Center, etc.

The average monthly rents in Central, as of August 2009, are as follows:

• Grade A buildings – HK$ 726 per sq meter
• Grade B buildings – HK$ 404 per sq meter
• Grade C buildings – HK$ 315 per sq meter

Sheung Wan

Sheung Wan is located north west of Hong Kong Island. Sheung Wan is one of the oldest business districts in Hong Kong and has retained its local character and community spirit. It is the center of Hong Kong’s traditional dried seafood trade and houses a number of trading companies. With comparatively inexpensive rental rates and close proximity to Central, Sheung Wan has become popular with foreign entrepreneurs in recent times. It is home to marketing and media start-ups, contemporary art galleries, modeling agencies and other small-scale companies. However, as more foreign entrepreneurs flock to Sheung Wan, rental rates of commercial space in the area continue to rise steadily. Sheung Wan provides easy access to Central by train or bus (less than 5 minutes) or even by walk (10 – 15 minutes). Furthermore, the Hong Kong-Macau Ferry terminal is located in Sheung Wan.

The average monthly rents in Sheung Wan, as of August 2009, are as follows:

• Grade A buildings – HK$ 576 per sq meter
• Grade B buildings – HK$ 205 per sq meter
• Grade C buildings – HK$ 229 per sq meter

Wan Chai and Causeway Bay

Wan Chai and Causeway Bay are further east of Central. However, there is easy access to Central from these areas, with 10-15 minutes being the maximum commuting time. Wan Chai is located along the waterfront with close proximity to the Hong Kong Convention and Exhibition Center. It is one of the busiest and most densely populated commercial areas in Hong Kong and is home to many small and medium-sized companies and a cluster of government offices. Wan Chai and Causeway Bay tend to be favored by trading and engineering firms, technology related companies and computer firms. Both Wan Chai and Causeway Bay have shopping malls and hotels and are well served by transportation services.

The average monthly rents in Wan Chai and Causeway Bay, as of August 2009, are as follows:

• Grade A buildings – HK$ 462 per sq meter
• Grade B buildings – HK$ 309 per sq meter
• Grade C buildings – HK$ 287 per sq meter

Admiralty

Admiralty is located on the eastern side of Central and borders Wan Chai to the east and Victoria Harbor to the north. Admiralty is a popular office district for financial institutions, business centers and MNCs. The Far East Financial Center, Lippo Center Towers and the CITIC Tower are some of its major buildings.

Average monthly rents in Admiralty are lower than that of Central. However, exact rental figures are unavailable.

Island East

Island East is a part of Hong Kong’s Eastern District and consists of business districts at North Point and Quarry Bay. Island East was developed and is managed by Swire Properties; it is one of Hong Kong s best planned and established business districts. It offers over 8 million square feet of commercial space. This commercial hub also offers a comprehensive range of business and leisure amenities and houses over 300 multinational corporations. Island East is serviced by two MTR stations and over 50 bus and tram routes. In particular, One Island East is Hong Kong’s new premium office tower and is a 70 story triple Grade-A office building with breathtaking views of the harbor. Island East is popular with IT and telecom companies. Cambridge House, Oxford House and PCCW Tower are some of the other major buildings in this district.

The average monthly rents in Island East (comprising the business districts at North Point and Quarry Bay), as of August 2009, are as follows:

• Grade A buildings – HK$ 351 per sq meter
• Grade B buildings – HK$ 285 per sq meter
• Grade C buildings – HK$ 232 per sq meter

Tsim Sha Tsui

Tsim Sha Tsui is the traditional business district located at the southern tip of the Kowloon peninsula. It is one of Hong Kong’s most cosmopolitan areas and houses financial institutions, hotels and shopping centers. It is an ideal location for businesses that want to locate on Kowloon. Due to its proximity to the Kowloon-Canton Railway (KCRC), Tsim Sha Tsui is a popular location for merchandising and trading firms who do business with China. Tsim Sha Tsui offers easy access to major locations in Hong Kong, owing to an extensive network of bus routes. It is also served by trains at its MTR Tsim Sha Tsui Station. Ferry routes connect Tsim Sha Tsui to Central, Wan Chai and Cheung Chau. The China Ferry Pier connects it to Macau, Guangzhou and other destinations in the Pearl River Delta.

The average monthly rents in Tsim Sha Tsui, as of August 2009, are as follows:

• Grade A buildings – HK$ 322 per sq meter
• Grade B buildings – HK$ 280 per sq meter
• Grade C buildings – HK$ 274 per sq meter

On a final note

There has been a steady demand for office space in Hong Kong and office rents in the core business districts have continued to rise at a strong pace. To keep pace with the growing demand, non-core districts like Kowloon Bay and Island East are increasing the supply of office space and are likely to offer competitive rents.

With Hong Kong positioned as a preferred location for foreign companies and investors, the demand for office space is only expected to rise. It is indicative that Hong Kong is likely to sustain its position as the world’s most expensive place to rent an office, in the years to come.