How to choose an office in Hong Kong?

As one of the ‘Four Little Dragons’ in Asia, Hong Kong has long been positioned as an important financial hub. Despite the impact of the pandemic, it is vigorously recovering. Its strategic location and business-friendly environment have been attracting local and international businesses, making the metropolis one of the most expensive cities in the world. 

In such a competitive market, choosing the right office is key to business success. Whether you are an entrepreneur or business owner planning to set up or expand your operations in Hong Kong, or you’re considering establishing a presence in the region with your established corporation, this article will give you insight into the local office market. It will guide you through the key considerations when selecting an office, how to determine your office space needs, an overview of popular business districts in the city and key points on legal and regulatory aspects. 

Understanding Hong Kong's Office Market

Hong Kong has always been regarded as one of the most densely populated and expensive cities in the world. Despite being impacted by the pandemic and tense China-US relations, the local real estate market remains strong. In terms of office space, apart from the traditional business districts such as Central, Admiralty and Wan Chai, the government has been developing new areas like Quarry Bay and Kowloon Bay. They’re planning to expand into the northern New Territories and Eastern Kowloon. Monthly rental in the Central Business District (CBD) can go up to HK$100 per square foot, while in the upcoming commercial areas, the rent is around HK$40-50 per square foot.

The city’s workspace market is diverse with various types of spaces available, ranging from traditional offices to serviced offices and coworking spaces. Due to the high rental rates and the constantly evolving business world, many businesses are opting for flexible spaces to avoid committing to long-term leases. As a result, the demand and supply of flexible workspaces continue to grow.

Key Considerations for Office Selection

Selecting the right office space is key to business success. Not only should it provide sufficient support for day-to-day operations, but it also needs to create a pleasant environment for your team to work comfortably. In Hong Kong, businesses need to take several key factors into consideration when selecting an office.

First, identify your target market and where they are located. There are various businesses in this city, and certain industries tend to locate their offices in specific business districts due to the amenities in the area. For instance, most financial institutions like banks and investors are drawn to Central since it is close to Hong Kong Exchanges and Clearing (HKEX). Being in the same neighbourhood with your potential clients can build a better corporate image and also makes it easier to develop your business network. 

The accessibility of the office is another important factor. Although Hong Kong has some of the best public transportation networks, it is certainly a big advantage for employees and clients if the office is close to transportation hubs such as MTR stations and bus terminals. It is also recommended to schedule a physical visit to check the infrastructure and amenities in the area. With redevelopment plans ongoing in the city, having a construction site next to the office can be distracting. Check for nearby restaurants, cafés, bars, supermarkets, and shopping malls as well.

Last but not least, legal and regulatory requirements, including tenancy agreements and compliance regulations, must be taken into account. Think about whether you can commit to the long-term lease of a traditional office, or would prefer a flexible lease instead. Overall, understanding your business needs can help narrow down your office search and find the right workspace. 

Determining Your Office Space Needs

After selecting a business district, you can move on to choosing the right office space. Depending on the type and stage of your business, the workspace requirements can be very different. 

Start by assessing your size and layout requirements. Do you work alone or have a team to accommodate? Do you need a showroom to display your products? For businesses like legal consultancy, there are strict office privacy and security protocols to follow. Think about the day-to-day operations and analyse what you require in the office to support and run your business smoothly.

Having a realistic budget and allocating resources efficiently is key to a thriving business, particularly in an expensive city like Hong Kong where the rent and labour costs are high. If you are going for a traditional office, consider the upfront investment in office equipment and utilities such as electricity and internet, as well as the maintenance and restoration cost when the lease ends. Reserve funds for ad-hoc expenses and plan for the next 5 to 10 years. Most traditional office leases can last several years, which could be risky for startups or small businesses to commit to. They’re also less flexible in terms of scalability – if you expect your business to expand rapidly, a short-term lease can give you better flexibility to move into a bigger space without committing from the start.

Remember that a fancy corner office overlooking the harbour is awesome, but being realistic is the best strategy for your business. 

Popular Office Locations in Hong Kong

Hong Kong is divided into three main regions: Hong Kong Island, Kowloon, New Territories, and outlying islands. The traditional CBDs include Central, Admiralty and Wan Chai on Hong Kong island, and Mong Kok and Tsim Sha Tsui in Kowloon. Financial institutions like banks and investors favour Central, while legal firms can be seen around Admiralty, where the High Court is located. Mong Kok and Tsim Sha Tsui are shopping paradises that attract many footprints, ideal for retailers to set up their offices in these areas. 

Thanks to the excellent public transport system in the city, all the CBDs in Hong Kong can be easily accessed by MTR, buses, minibuses and taxis. Numerous choices of hotels, restaurants and bars can be found in these areas, from Michelin-starred restaurants to local Cha Chaan Tengs. Yet, the high demand makes these areas very competitive, reflecting directly on the expensive office rentals. The monthly rates of a Grade A office can cost up to HK$100 per square foot in Central, which is very high even by international standards. The CBDs are also packed with traffic, particularly during rush hours, which can add more travel time.

In recent years, the local government has been actively partnering with private developers to build new CBDs such as Kowloon Bay and Quarry Bay. Corporations including Facebook, Nike and Microsoft have moved their back offices to these areas to save costs. Science Park in Sha Tin also attracts tech startups and the like. To further solve the density issue in the CBDs and attract more investments, the government is planning to expand into the Northern New Territories, as well as Lantau island where the Hong Kong-Zhuhai-Macao bridge is located. 

Hong Kong’s diverse and dynamic business environment welcomes all kinds of businesses, and in terms of office locations, there is always something for everyone.

Navigating Legal and Regulatory Aspects

Once you have decided on an office space, the next step is to review the tenancy agreement and lease terms. It is important to read through the terms and conditions to protect yourself and understand your rights and responsibilities. Other than the start and end dates, check the renewal and termination terms and mark them on your calendar as a reminder. In Hong Kong, common lease agreements include fixed lease tenancy, break clauses and the option to renew, and they are bound by law. 

Check the government regulations and compliance requirements, especially if you’re in the finance and legal industries, where strict policies must be followed. Ensure you have an address for business registration. For example, some coworking spaces do not allow renters to use their address, and they will have to seek a virtual office package elsewhere. If you’re not familiar with the process or have any questions, always consult with real estate agents and legal advisors, as they can provide valuable advice based on your situation.

Conclusion

Understanding the office market trends, the differences between CBDs and legal aspects can help businesses make informed decisions when selecting an office in Hong Kong. By evaluating key factors such as your office space needs and budget, businesses can choose a location that meets their requirements. With its diverse office space options and pro-business policies, Hong Kong offers a conducive environment for business success.