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How to take advantage of opportunities in Hong Kong’s newest business district
In the late19th century, it's said that business tycoons would look out their office windows and count the number of ships in the harbour - the more ships, the better the business climate. Today, the smart business observer is counting the number of office towers and retail centres that are springing up in Kowloon East.
Kowloon East has taken off since Kai Tak changed functions from an airport to a cruise terminal and the long-standing height restrictions in the area were lifted. It is at the heart of the government's 2011 plan to create Hong Kong's second CBD, and plans to energize and transform the area mean that this emerging business hub, which spans Kowloon Bay, Kwun Tong, San Po Kong and Kai Tak, is now a viable, attractive alternative office location for both multinational and local enterprises.
Blue-chip developers, such as Swire, Mapletree and Link REIT have already begun to ramp up their investments in the area, with further commercial centres planned for completion in the short to mid-term. Goldin Properties, meanwhile, is close to completing the Goldin Financial Centre in Kowloon Bay, which will provide 24 storeys of prime office space across floor plates of around 35,000 square feet. Featuring four restaurants on its lower levels, ample parking and a range of green features including charging facilities for electric vehicles, the developer has ensured that the building's amenities are the equal to those found in Hong Kong's traditional office hubs.
To spur further office growth, the government has steadily ramped up land supply and has earmarked more than 20 parcels of land for office development. This could potentially yield 12 million square feet of Grade A office floor space for those sites that have not already been sold. Most of this premium office space will be located in the city's former international airport at Kai Tak, where a detailed development timeline has yet to be released. With the Shatin-Central Rail Link scheduled to complete in 2021, however, it is reasonable to assume that the first of these sites will be available in the market within the next few years ahead of that opening.
This new supply in Kowloon East will offer more opportunities for occupiers to secure cost-effective offices to accommodate expansion and consolidation requirements. Increasing numbers of small and medium-sized companies (SME), start-ups and entrepreneurial businesses are starting to move to the area because office supply in Hong Kong's traditional core business districts of Central, Wanchai/Causeway Bay and Tsim Sha Tsui is so tight. The tenant mix in the area is beginning to diversify away from sourcing, manufacturing and garment companies to include the back offices of banks and insurance firms. Large occupiers will also need to reassess their long-term real estate plans, deciding whether to buy or lease, and whether to consolidate or adopt split office configurations.
With at least 20 million square feet of Grade A office supply to be delivered across Hong Kong before 2024, in both core and emerging locations like Kowloon East and Kowloon West, immense opportunities lie ahead for both occupiers and investors alike.
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