Hong Kong SAR and Singapore are evenly matched in the race to attract multinational corporations seeking to establish their regional headquarters in Asia Pacific, according to CBRE’s latest research.

The CBRE study compares the two markets using key indicators such as influence in the Asia Pacific region, financial and technology industry scale, talent availability and attraction, residential rents, office rents and prices, and office availability.

Hong Kong Central’s Grade A rents remain the highest globally and are currently about 40% higher than those in Singapore’s core CBD. Hong Kong SAR also offers more affordable office space in decentralised areas such as Hong Kong East and Kowloon East, where Grade A rents are up to 75% lower than in the Central CBD and below those in Singapore’s decentralised locations.

In the past two years, office investment activity in Singapore has increased, due to solid economic growth, healthy office sector outlook and higher availability of investable en-bloc office buildings. In contrast, Hong Kong SAR’s prime office prices have been declining, which has led investors to evaluate potential acquisitions at lower prices in anticipation of market growth.

“Investors continue to be attracted to Singapore’s office properties due to their stable returns and solid price performance. Deeply discounted office assets in Hong Kong also offer favourable prospects for value-oriented investors. In the coming months, the debt funding gap for Hong Kong offices, resulting from interest rate hikes and weakening capital values, could trigger more discounted sales and create other attractive prospects for buyers,” said Dr. Henry Chin, Global Head of Investor Thought Leadership & Head of Research, Asia Pacific for CBRE.

Hong Kong SAR has a larger office market and a larger supply pipeline of office space than Singapore. Total office stock in Singapore is only 73% of that in Hong Kong SAR. This gives corporate occupiers more options and flexibility when choosing an office location in Hong Kong SAR.

Hong Kong SAR is set to add more office space than Singapore over the next four years. Between 2023- 2026, Hong Kong SAR will see the addition of 10% of its existing stock, while Singapore will welcome the completion of 7% of its existing office supply. This will further widen the gap between the two cities in terms of total office stock.

“Despite the narrowing rental gap, Singapore remains a top destination for global tech companies planning to set up corporate Asia Pacific headquarters; however, higher living costs, particularly residential rents, are weighing on relocation decisions by global talent,” said Ada Choi, Head of Occupier Research, Asia Pacific, for CBRE. “Corporate occupiers in Hong Kong SAR should move quickly to secure more attractive leasing terms while availability remains high, and the market continues to favour tenants.”

To read the full report, click here.