Colliers International has released Colliers Hong Kong’s new Annual Occupier Survey Report 2018. The survey seeks to understand major occupiers’ real estate strategies in the Hong Kong office market through surveys with 295 occupiers from various industries spanning banking and finance, information and technology, sourcing and trading to beauty, medical, health and wellness.

In the Annual Occupier Survey 2018, respondents remained optimistic about their business outlook and office demand. While the city’s CBD is slated to remain the premium office market in Hong Kong, companies are increasingly planning for flexible workplace solutions and Activity Based Working (ABW) in their future offices. Workplace wellness is also a topic of growing interest and is poised to make more of an impact on the office market as companies become increasingly aware of its benefits on employee wellbeing and productivity.

 “Despite global economic uncertainties such as the escalating trade tension between US and China, we expect Hong Kong’s office market to remain constrained by high costs in 2019 due to high office space demand. Both occupiers and landlords should be more agile in this tight market to be able to thrive in rapidly-changing business environments.“ – Fiona Ngan, Head of Office Services at Colliers International.

A Strong Outlook for the Office Market Driven by “New Economy” Players

This year’s survey found that Hong Kong office occupier confidence is high with 90% of respondents feeling either positive or stable about their business outlook. With strong economic growth in H1 2018, business prospects have not yet been dampened by rising interest rates or the ongoing US-China trade war. In contrast, office demand from mainland firms has decreased from 2017 due to the changing macro-economic context, tightening regulations on overseas investment and China’s slowing economic growth.

In terms of office capacity, Hong Kong office square footage should continue to rise over the next three years as only 6% of surveyed companies are looking to downsize. Given today’s fast changing business models, tenants did want to see increased flexibility incorporated into their tenancy agreements, allowing them to resize or surrender space easily to meet constantly shifting needs. Holding its own against emerging office districts and ongoing relocations, the CBD is still the preferred location of 65% of traditional banking and financial companies, indicating that it will remain the premium office market in Hong Kong.

The new economy is making its impact felt on the office market with a number of players who have a more bullish outlook than their more traditional counterparts. Hong Kong has recently seen a revival in the number of local startups in the IT, technology, media & entertainment sectors. 

With the exception of fintech companies who want to be close to their clients in CBD, these new startups will more likely establish a permanent presence in decentralized districts upon leaving incubators and accelerators. In fact, more than 50% of these new economy companies plan to expand their office square footage in the coming years.

Growing Interest in Alternative Workplace Strategies

In 2018, Hong Kong companies have shown stronger interest in alternative workplace strategies as more than 35% of respondent welcome changes brought about by Activity Based Working (ABW) as a way to enhance their brand image and attract a younger generation of talent. The ABW concept differs from existing office approaches as it features open plans with a variety of workspace choices, hot desking, and core-flex leasing models. The banking and finance sector in particular looks to be the leading sector to champion the adoption of flexible workplace solutions, but the survey notes that leadership from top management is key to expediting this transformation by recognising the need for cultural and behavior changes in addition to newer, brighter workspaces.

Workplace Wellness Poised to Become a Top Priority; Workplace Tech Lagging Behind

The study also examined other elements that will play key roles in attracting and retaining the workforce of the future. Companies in Hong Kong still lag behind other major cities when it comes to investing in new technologies (both hardware and software) and workplace wellness. 

The deployment of new technological hardware and software is key to increasing productivity and enhancing the work experience. However, there is currently a lack of awareness and knowledge of how technology can enhance staff working experience, with companies more willing to invest in established technologies such as intranet, HR online processes and virtual meeting tools. There was limited interest in newer technologies such as enterprise social media tools or digital data management.

Wellness in particular figures to become a key component of workplace strategy with Hong Kong’s notoriously long office hours. Although workplace wellness awareness is indeed on the rise, only 54% of survey respondents currently have employee wellness programs in place, with many offerings at a rudimentary level.

Click here to download the full Hong Kong Annual Occupier Survey Report 2018 from Colliers International.

For more information about the report or the Hong Kong office market phone or email Zac Tang, Assistant Manager Research Hong Kong Colliers International via the contact details below.

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