Recent research by The Instant Group, a leading provider of independent flexible workspace solutions, paints an interesting picture of the office market in Hong Kong — a country whose COVID-19 policies varied greatly from other parts of Asia.
Despite the pandemic’s outbreak in early 2020, Hong Kong’s comparably low case numbers and lack of restrictions meant that business activity was able to forge ahead. As a result, demand for flexible office space in 2021 was up 22% from pre-pandemic levels in Hong Kong, showing a unique resiliency to the consequences of the pandemic seen in major global markets like London or New York City.
The findings show that supply of flexible workspace in Hong Kong has also increased by 6% year-on-year (2021 vs. 2020) and is forecast to grow 15% by 2023.
Several major operators have recently expanded their presence in Hong Kong, further demonstrating the popularity, strength, and resilience of this particular flex market. IWG is set to open its 19th office space in July in the bustling Wan Chai area, opening a new location in a former WeWork space.
Other operators have also been busy expanding their footprint across Hong Kong, with Compass Offices and The Executive Centre opening new spaces in the last 12 months. With the average rent for Grade A office space in Hong Kong falling by 4.7% year-on-year in 2021, it makes sense that coworking operators are taking the opportunity to upgrade and expand their offerings within this market.
“There is now a window of opportunity for clients looking to take on flex space at a reduced price before we see rates starting to increase later this year,” said Bobby Sodeiri, Director at The Instant Group Hong Kong.
Workstation rates drops across key areas of Hong Kong
Instant’s data also reveals that key business districts including Wan Chai, Tsim Sha Tsui, and Causeway Bay all experienced a drop in workstation rates year-on-year (2021 vs. 2020). Wan Chai experienced a decrease of -5%, with the average annual 2021 rate sitting at $5,218 HKD.
Rates dropped slightly less in Tsim Sha Tsui and Causeway Bay — by -3% and -2% respectively in 2021 compared to 2020 — with a desk costing on average $6,435 HKD and $6,527 HKD in 2021.
The Central District and Sheung Wan differed from the other districts, with rates increasing by 1% and 3% respectively year-on-year. A workstation in Sheung Wan in 2021 averaged $6,833 HKD per desk per annum, while in the Central District a desk cost $9,477 HKD — the most expensive out of any key Hong Kong district.
Comparatively across APAC, Hong Kong remains one of the more stable flex space markets, with workstation rates decreasing by only -1% in 2021 vs. 2020. Workstation rates in other parts of APAC all saw more dramatic price reductions in 2021, dropping in Singapore by -20%, Tokyo by -15%, Seoul by -12%, and Sydney by -11%, according to Instant data.
“Across most of Southeast Asia, Instant saw rates decrease in 2021 across key markets as demand for flex space reduced last year due to the pandemic. However, as we begin to enter a more stable global environment managing COVID-19, with demand for flex space increasing in Hong Kong alone by 15% between Q4 2021 and Q1 2022, we expect to start to see rates for flex space increase across all markets,” said Sodeiri.
To access the 2022 Hong Kong Flex Office Review by The Instant Group, visit their website to download the full analysis.