JLL: Eight drivers that will power Hong Kong’s future success
Economic growth will be stronger than the past five years
HONG KONG, 20 April 2021 – JLL identified eight drivers that will power Hong Kong’s future success, according to its “New Heights: Is Hong Kong Poised For Future Growth?” report launched today.
Gavin Morgan, Managing Director at JLL in Hong Kong and Chief Operating Officer in Greater China, said: “Hong Kong has always been one of those economies to recover early and fast from economic downturns. Although the city has been hit by Covid-19 and social tensions over the past two years, we have confidence that the city’s growth in the coming years will be strong. With China already firmly established on a renewed growth trajectory, Hong Kong is set to benefit. Already this year, total trade in the first two months has grown approximately 30% year-on-year.”
Eight drivers that will continue to strengthen Hong Kong’s economy:
1. Economic/business agenda
- The Shenzhen-Hong Kong-Guangzhou region ranked second in the World Intellectual Property Organization’s Global Innovation Index in 2020. The powerful science and technology cluster will open up huge opportunities for business services in Hong Kong.
- With fiscal reserves of HKD900 billion, the Government has the resources to take care of immediate economic strains and invest in the future. Continuing to develop infrastructure that fits the powerful, inextricable melding of Hong Kong into the Greater Bay Area, one of the world’s largest urban city clusters is a key priority for the city.
- Smart businesses have also been rethinking how operations and assets in Hong Kong fit into their Greater Bay Area, China and global strategies. These decisions will have implications for landlords’ and occupiers’ real estate investment needs against the backdrop of rising opportunities.
- Hongkongers are uniquely action-oriented and have a ‘can-do’ attitude, creating momentum around initiatives and projects that will produce successful outcomes. It is always open and welcoming to global talent too, keeping the city energised at all times.
3. Friendly business environment
- Hong Kong is a free port customs territory with no restrictions on foreign ownership or on the movement of capital, talent, goods or information.
- Data from the Census and Statistics Department shows there are more companies from mainland China, France, Germany, the UK and Singapore with regional headquarters in Hong Kong in recent years (Chart 1).
- An InvestHK survey revealed that in 2020, there are 3,360 start-ups, 50% more than in 2017, demonstrating the rapid growth of tech start-ups setting up base in Hong Kong. Some of the most promising start-ups will grow exponentially in the years to come (Chart 2).
Chart 1: Number of regional headquarters in Hong Kong by country / territory
Chart 2: Four major start-up industries in Hong Kong
4. China and global connector
- Hong Kong’s role as a global financial hub, with its well-regulated banking system and role as an RMB trading centre make it an ideal place for Chinese businesses to be listed and raise international capital, as well as for multinationals to connect with Chinese and global trade and capital market opportunities.
5. Infrastructure and transportation
- Hong Kong’s vast network of mass transit railways, highways, tunnels and bridges, airports, ports and control points to mainland China will take on increasing value as Hong Kong businesses integrate into the Greater Bay Area.
- The Hong Kong-Macao-Zhuhai Bridge and the Tuen Mun-Chek Lap Kok Link have set the stage to facilitate a seamless flow between Hong Kong and the Greater Bay Area.
- Hong Kong International Airport is soon to complete its third runway, further extending its status as a regional hub and a true global connector into and out of this region for many decades to come.
- Data centres, the backbone of the new economy today and tomorrow, will more than double their capacity in the next few years to some 630 MW, well in line with those of regional peers.
6. Low and simple tax regime and an independent judiciary
- Hong Kong is one of the most tax friendly jurisdictions in the world with just three types of direct taxes: profit, salary and property taxes.
- The simple tax system encourages corporates and individuals to focus on their businesses and work, as well as simply strive for the best economic outcomes.
7. Improving quality of life
- With the average living space per person hovering at around 161 sq ft (15 sq m), it is understandable that much of the population aspires to upgrade their living conditions, hence the considerable demand for housing.
8. Land Supply
- Hong Kong is embarking on major land formation initiatives, including the Lantau Tomorrow project, schemes for farmland and brown field site conversion, as well as plans to build a new CBD and innovation/technology parks that will serve the real estate requirements of the enterprises of tomorrow.
- The land supply options identified by the Task Force on Land Supply range from short-to-medium term, medium-to-long term and conceptual ideas, which are all worth pursuing to facilitate Hong Kong’s way ahead.
- The vision of developing a CBD2 at the former Kai Tak Airport will reshape the concept of business dwelling in Hong Kong. Office space in CBD2 will grow by more than 50% to close to 30 million sq ft in the coming decade.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion, operations in over 80 countries and a global workforce of more than 91,000 as of December 31, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.