Chinese Banks Expand in World’s Priciest Office Market

(Bloomberg) -- Chinese finance companies are taking more office space in Hong Kong, joining Alibaba and other mainland firms expanding in the world’s most expensive market even as foreign players consider scaling back.

CMB International Capital Corp., China Minsheng Banking Corp. and Orient Finance Holdings Ltd. expanded their office space in the Central hub in the past three months, according to people familiar with the matter.

CMB International, a subsidiary of China Merchants Bank Co., leased an extra floor with about 17,000 square feet (1,579 square meters) in Champion Tower this month, said the people, who asked not to be identified because the information is private.

Minsheng Bank signed up for about 12,000 square feet at Two International Finance Centre last month, while Orient Securities Co.’s local arm Orient Finance added 13,000 square feet in 100 Queen’s Road Central in April, according to the people.

Spokespeople for CMBI, Minsheng and Orient Finance declined to comment.

Confidence Vote

The Chinese expansion contrasts the muted demand from global firms in the Asian finance hub. Property consultants have said that foreign companies are reviewing their office needs as the virus prompts many staff to work from home. The market has also been hit by a virus-induced recession, and lingering concerns over pro-democracy protests and a more restrictive security law proposed by China.

Chinese companies are increasingly dominant players in the office market. While the number of outposts for Japanese or U.S. companies has stayed broadly static over the past five years, the number of mainland Chinese companies with feet on the ground has soared.

Even with the Chinese expansion, the vacancy rate in the prime business district rose to a 12-year high of 5% in May, according to Jones Lang LaSalle Inc. Central has the world’s costliest rents for office, averaging $313 per square foot, topping New York’s Midtown and London’s West End, data from JLL show.

Tech giants from mainland China have also leased more floors to accommodate their growth in the city. TikTok owner ByteDance Ltd. and Alibaba Group Holding Ltd. took up more space in Causeway Bay, just a few subway stops from Central.

©2020 Bloomberg L.P.

With assistance from Bloomberg