Analysts believe the district has the potential to be Hong Kong’s tech hub
Chinese tech companies seeking to go public through Hong Kong’s stock exchange rush into Tsim Sha Tsui offices, considering cheaper rents and accessibility to the high-speed rail link between mainland China and Hong Kong, reported South China Morning Post.
Such foresee follows Tencent’s footprint expansion in Hong Kong via a 10,000 square-foot office space leasing in The Gateway, a building owned by Wharf (Holdings) in the region. The company occupies other offices at Three Pacific Place in Wan Chai, and the World Finale Centre also located in Tsim Sha Tsui.
According to agents, Tencent’s rent would cost HKD6 million (USD770,000) per year for The Gateway space, which is approximately a fifth lower than the price it would’ve paid for the same space two years ago.
The city is likely to see more Chinese companies lease office space, as renowned Chinese short video app Kuaishou Technology had recently listed its shares in Hong Kong, including Kuaishou’s competitors such as Duoyin, Bilibili, and iQiyi reportedly contemplating flotations.
Such situation would help relieve the city’s landlords struggling with the high vacancy rates as the economy recovers from the pandemic.
Daniel Wong, CEO of Midland IC&I, said, “in China, Shenzhen has been a tech hub instead of Hong Kong, but [because of Chinese stock listings], it is believed that more tech firms will set up offices in Hong Kong.”
“They will locate their offices in different locations, but probably not Central because of the high rent,” he added.
Fiona Ngan, head of office services in Hong Kong at Colliers International, mentioned, “Tsim Sha Tsui offers cheaper rental, it has better building quality compared with Hong Kong Island, and is close to the West Kowloon station.”
The high-speed railway from West Kowloon station, a seven-minute drive from Tsim Sha Tsui station, takes around 15 minutes to arrive at Shenzhen. This makes it incredibly convenient for Chinese tech executives, as West Kowloon station is the only station in the city for the Guangzhou-Shenzhen-Hong Kong Express Rail Link.
Lower rents in Tsim Sha Tsui seem to be an even bigger lure. As stated by Colliers, the district experienced the biggest decline in office rents in 2020, a 21.7 percent fall, which is worse than Central and Admiralty districts (17.9 percent), and the overall fall throughout Hong Kong (15.9 percent).
According to property consultancy JLL, prime office space in Central had a 7.3 percent vacancy rate in December, a 16-year record high, surpassing 7 percent for the first time since 2004. In January, the city’s overall vacancy rate slightly increased from 8.8 to 8.9 percent, and it is expected to grow further as companies reduce or surrender their space.
Analysts believe that if landlords take the initiative, Tsim Sha Tsui could potentially become a technology hub. In December, Savills released a report indicating Hong Kong’s appraisal as a “tech megacity”, known for complementary industries, global connectivity, and a deep talent pool.
Ngan of Colliers said that for Tsim Sha Tsui to transform from a shopping district to Hong Kong’s tech hub, it would need to further improve its transport networks.
“TST can further improve its attractiveness by improving proximity to the transportation network to the mainland,” she added.
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