Chinese financial players shake up Hong Kong office market

Wed Mar 2, 2016 8:15pm EST
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By Clare Baldwin

HONG KONG (Reuters) - Mainland Chinese financial institutions have expanded their physical footprint in Hong Kong's prime business district at their fastest pace in five years, driving up rents and underscoring how Beijing's policies are reshaping the city.

While international firms are consolidating and re-locating offices to save money, Beijing is pushing on with plans to draw the former British colony into a Pearl River Delta mega-economy - and China's financial institutions are leading the way.

Policies such as the Shanghai-Hong Kong stock connect and mutual funds recognition schemes point towards greater integration, and with it the sort of landmark purchases that Chinese companies have made in other financial capitals like London and New York.

"Ultimately, there will be more mainland Chinese firms in Central," property consultant Jones Lang LaSalle's head of Hong Kong research Denis Ma said, referring to Hong Kong's glittering central business district.

"All of the high marks in the rental market, especially in Central, are being set by (mainland Chinese) companies."

Jones Lang LaSalle forecasts prime office rents in the Central business district will jump 5-10 percent this year, even as China grapples with its slowest economic growth in 25 years and tumultuous stock and currency markets.

Even though Hong Kong is officially part of China, it has a separate financial and legal system and the influx of mainland companies into the semi-autonomous southern territory is part of Beijing's push to get Chinese companies to expand overseas.

China's outbound M&A activity hit a record $113 billion last year, while its financial institutions snapped up landmark properties abroad including the Waldorf Astoria and Baccarat hotels in New York and an office tower in London.   Continued...

A ferry sails at Victoria Harbour in front of the financial Central district, featuring AIA Central (C) and Cheung Kong Center behind it, in Hong Kong, China February 17, 2016.   REUTERS/Bobby Yip