Because of the abundance of talent and office space, Hong Kong has an advantage over Singapore as the leading corporate centre
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A study that rated two of the most enduring competitors Hong Kong and Singapore as business hubs has given the overall advantage for Hong Kong thanks to factors like its financial strength as well as its talent pools, as well as Singapore’s advantage is evident in technology and describing shifts between the two offices rental markets of the two cities.
The study, published by property consulting firm CBRE this week, assessed Hong Kong and Singapore across seven broad categories. Hong Kong came out on the top of three categories: the size of its financial sector and its talent pool and its abundance offices.
Singapore won the award in two different areas that are: the size of its technology sector and its work in ESG (environmental social, and governance) initiatives as well as green construction. Two categories – influence on Asia-Pacific as well as office rents and prices – were too close to be able to make a decision.
“Hong Hong SAR as well as Singapore are both established as prime destinations for multinational corporations to establish the Asia-Pacific offices,” the study said.
It is a hub for business. the study concluded that Singapore’s economy is more diverse than Hong Kong’s. This is because the service industry of Hong Kong, including financial trade, insurance and trading is responsible for over 90 percent of the city’s total economic output.
In 2020, as a result of the effects of the Covid-19 pandemic Singapore’s actual gross domestic product (GDP) was $374 billion ($496 billion) surpassing Hong Kong at US$362 billion.
Both cities are important in terms of connectivity although they are in different regions in that Hong Kong is a regional center that serves China in addition to North Asia while Singapore is more central to the rapid-growing economy that are booming in Southeast Asia, the report noted.
The GDP of all the economies within four hours from Hong Kong is US$28 trillion and Singapore’s four-hour sphere covers US$7 trillion, the report noted.
In June, the number multinational companies with their regional offices in Hong Kong had fallen 5% when compared to June 2019. However there is “limited evidence of an enormous corporate relocation from Hong Kong”, CBRE added, adding that the 18% growth on the mainland businesses within the city during the same period is more than offset by any decrease.
Hong Kong is likely to become the world’s largest private wealth management hub and could surpass Switzerland by 2026 according to a report. The city hosted an event called the Wealth for Good summit in March in an attempt to convince 200 family offices – private firms that wealthy families have created to manage their investments and charitable efforts to pick Hong Kong as their base until 2025’s end. Hong Kong has exempted family offices from taxation on profits from December.
But, Singapore outpaces Hong Kong in regards to research and development expenditure by investing nearly two% of its total economic output which is compared to just one% for Hong Kong, CBRE said. Hong Kong is “catching up” with Singapore in terms of technological capabilities thanks to “deepening cooperation in collaboration with Shenzhen as well as in the Greater Bay Area”, CBRE declared.
Singapore has attracted more talent in the this year, whereas Hong Kong experienced a net outflow. A 13% growth in foreigners in 2022 prompted an increase in the rents of residential homes in Singapore however, the number of foreigners was lower than the levels of 2019, CBRE stated.
Singapore is home to the highest number of scientists and technologists as well as Hong Kong possesses a deeper financial talent pool. The competition between Hong Kong and Singapore in the search for highly skilled employees is likely to increase in the coming years, as both have introduced new visa programs to attract the best talent.
The tying in office rents was triggered by Singapore rents have increased by 43% in the last three years while Hong Kong’s “registered their highest drop in the past decade during 2022”.
An increase in the supply of office space of office space Hong Kong is also likely to increase rents, the study found. The total office inventory in Singapore is just 72% of the total in Hong Kong, which is scheduled to add another 10% to the existing inventory between the year 2026 and this one. Singapore however, is set to increase seven% to its current office equipment.
Hong Kong offers a more broad range of commercial opportunities than Singapore however Singapore is planning to speed up decentralisation from the central business district through the development of satellite areas of business in the coming 20 years.
“Despite the decreasing gap between rent and house prices, Singapore remains a top location for tech companies that are planning to set up their offices in Asia-Pacific office,” said Ada Choi director of research on occupiers in Asia-Pacific in CBRE. “However the rising cost of living and rents for residential properties have a bearing on the relocation choices made by international talent. Companies that are occupying offices who are based in Hong Kong should move quickly to secure lease conditions, even as availability is very high and the market continues to favor tenants.”
Regarding commercial property investment Investors continue to be attracted by Singapore’s office properties due to their steady returns and their excellent prices, according to Henry Chin, the global leader of thought leadership for investors and the head of research Asia-Pacific in CBRE.
“Deeply priced office buildings that are priced at a discount in Hong Kong also offer favourable opportunities for value-oriented investors” he added. “In the next few months, the funding deficit that exists for Hong Kong offices, resulting from the increase in interest rates and declining capital values could result in more discounted sales and offer other appealing prospects for purchasers.”