The Greater Bay Area (GBA) is a key strategic component in China’s national development blueprint, whose aim is to build a globally competitive metropolis by 2035 by connecting the two SARs of Hong Kong and Macau and Guangdong’s nine municipalities.
The GBA region has undergone rapid development in recent years, particularly in infrastructure and transportation network enhancement. Chapter Six of the Outline Development Plan for GBA issued by the Central government in February 2019 highlights the goal to build a globally competitive modern industrial system. One of the key themes that stands out is the Chinese government’s commitment to improve access to financial markets throughout the GBA. This shows the Chinese government’s commitment to improving capital flows throughout the region, which will benefit Hong Kong, specifically the office market.
According to our in-house data, interviews from landlords, as well as information from tenants and agency practitioners, Biomedical, Family office, TMT and Emerging and high-growth Chinese companies are the four new potential Chinese mainland businesses to come to the Hong Kong market.
The small rental gap between the leading GBA cities and Kowloon is a pull factor to attract companies from the GBA, especially Guangzhou and Shenzhen to choose Kowloon when they expand their footprints to Hong Kong market, or via Hong Kong to the international markets.
Patrick Mak, Executive Director, Head of Kowloon Office Strategy & Solutions & Head of Tenant Representation, Greater China comments, “The Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL) has brought attention primarily to Kowloon, and together with a competitive rent positioning, Kowloon market becomes a spotlight for many new entries from the Chinese mainland. We believe this impact will become more noticeable when the borders reopen.”
In addition to the traditional core business district (CBD) in Central and Admiralty, and CBD2 in Kowloon East, we believe that the GBA development, coupled with improved transportation infrastructure such as the commencement of the Shatin and Central Link (SCL) in 2022, will allow some emerging office hubs in Kowloon to grow. We foresee more office leasing demands in Kowloon will be generated along with GBA’s latest development as GBA companies tend to be more cost-sensitive, they look for locations directly connected to the GBA cities. We have identified three emerging office hubs in Kowloon that have greater potential to reap the benefits brought by the development of the GBA.
Kai Tak Development Node – it is well connected to cities in GBA via the Intercity Through Train;
Cheung Sha Wan – Lai Chi Kok – the upcoming notable new office supply in Cheung Sha Wan and Lai Chi Kok area will transform it into one of the largest office hubs in western Kowloon;
CBD1.5-XRL Station – given the large scale of development, prestigious location and unique positioning, the West Kowloon Cultural District together with the XRL topside project will become an important up and coming office hub in Hong Kong.
Steve Ng, Senior Director, Kowloon Office Strategy & Solutions says, Kai Tak Development Node is one of the key commercial hubs in CBD 2, there are huge growing opportunities in the area. Once the infrastructure and amenities become mature, it will become an alternative choice of a well-developed office location in Hong Kong.
Murphy Chung, Director, Kowloon Office Strategy & Solutions comments, Cheung Sha Wan-Lai Chi Kok area was once an industrial area with limited Grade A office supply. The upcoming notable new supply in Cheung Sha Wan will transform the area into a preferred location in western Kowloon, in particularly for businesses who look to capture GBA opportunities and enjoy an easy access to the container terminals and airport.
Remus Yu, Director, Kowloon Office Strategy & Solutions says, with a lack of new land supply in the central part of Kowloon, close proximity to Tsim Sha Tsui, the West Kowloon Cultural District area together with the XRL topside project will become CBD1.5-XRL Station, an important up-and-coming office hub in Hong Kong. CBD1.5-XRL Station area is a guaranteed future attention with its unique location, massive scale and its proximity to the XRL station.
Supported by strong connectivity with the extensive transport network, we believed that the three emerging office hubs that we discussed above - Kai Tak Development Node, Cheung Sha Wan - Lai Chi Kok as well as CBD1.5 - XRL Station will further strengthen their unique positioning as up-and-coming commercial hubs in Hong Kong.
Looking ahead, GBA will continue to gather momentums to develop into a world-class city cluster, and we expect that leasing demand from Chinese Enterprises to rebound and keep rising upon the reopening of the border.