Throughout the Covid-19 pandemic, Hong Kong has maintained incredibly strict pandemic protocols, aiming for a “Zero-COVID” policy. Its goal was to keep the country from seeing a single case of the coronavirus – an attempt that proved unreachable, and one that caused major emotional and financial strain on the Special Administrative Region (SAR), leading to a mass exodus of bankers and other white-collar professionals.
For over two years, employees in the SAR have mainly been working from home as part of the country’s Zero-COVID policy.
Now, the SAR is finally becoming a bit more lax. The region recently lifted flight bans and reduced mandatory quarantines for those returning to Hong Kong from 14 days to just one week.
As a result of easing restrictions, many businesses in Hong Kong are beginning to return to in-office work, and coworking operators are looking to evolve their strategies to recover lost capacity.
In light of this return to normalcy, Jonathan Wright, the Director of Flexible Workspace Consulting for Colliers Asia, says there are more mergers and acquisitions (M&As) in store for flexible office spaces and coworking spaces in Hong Kong.
“We have already seen a lot of activity around M&As and investment into the sector, and expect this to continue,” said Wright.
That prediction is already playing out: Hysan Development Company Limited, a property investment and management company, and flex office giant IWG have joined forces to develop new flexible workspaces in the Greater Bay Area.
Meanwhile, a company called theDesk recently attained Jumpstart Business Centre and plans to grow its offices through additional acquisitions. Jumpstart already had offices in Tsim Sha Tsui and Kwun Tong, along with three locations in Shanghai.
TheDesk says its occupancy rate has been steadily climbing, and retention rate for existing members or tenants has held steady at 86%.
“Acquisitions are an important extension of our existing business community. Aside from serviced offices, it brings a number of product and service extensions, which have the capacity to be cross-promoted across the portfolio, and are in line with theDesk’s ‘beyond space’ community philosophy,” said a spokesperson for theDesk. “There’s huge potential to bring together the strengths of each business with a view to providing additional services and opportunities to our members.”
Another flexible workspace provider based out of Hong Kong, the Executive Centre, was also recently bought out by Tiga Investments and a private equity firm called KKR.
Bobby Sodeiri, The Instant Group’s Director, says the company saw a 22.5% increase in demand last year compared to 2021 in Hong Kong.
“In major cities across China, we are already starting to see this play out this year, with inquiries via The Instant Group’s online platform increasing in Shanghai by 16% in the first month of this year compared to last January,” added Sodeiri.
CBRE in Hong Kong has noticed the trend as well and anticipates the coworking sector to strengthen as companies continue to return to the office.
“As the sector evolves, we have witnessed more corporate occupiers using flex spaces in addition to their core office footprint within traditional offices. We have also seen a couple of new operators looking to enter the market,” said Ada Fung, Head of Advisory and Transaction Services for CBRE’s Hong Kong Branch.