Singapore and Hong Kong SAR Leverage Strengths to Attract Multinationals: CBRE Survey

Singapore – May 4, 2023 –Singapore and Hong Kong SAR are evenly matched in the race to attract multinational corporations seeking to establish their regional headquarters in Asia Pacific, according to CBRE’s latest research.

The CBRE study compares the two markets using key indicators such as influence in the Asia Pacific region, financial and technology industry scale, talent availability and attraction, residential rents, office rents and prices, and office availability.

Singapore’s office rents have recovered to pre-pandemic levels with Grade A rents rebounding rapidly and now approaching a 10-year historical high. It however remains lower than in Hong Kong SAR where the Central’s Grade A rents remain the highest globally and are currently about 40% higher than those in Singapore’s core CBD.

In recent years the Singapore government has been encouraging and planning towards accelerating decentralisation, with a focus on the Jurong Lake District, slated to be Singapore’s second CBD. The scalability, development design and potential cost advantages of the site should ensure steady interest from occupiers. Hong Kong SAR may have more affordable office space offering in decentralised areas.

On the investment front, office investment activity in Singapore has increased in the past two years, unlike in Hong Kong SAR where there has been a decline. This is due to Singapore’s solid economic growth, healthy office sector outlook and higher availability of investable en-bloc office buildings. The earlier border reopening has likely also contributed to Singapore’s recovery.

“While investor sentiment remains cautious amid sustained rate hikes and the deteriorating global macroeconomic backdrop, Singapore continues to maintain its safe-haven status for investors. Rental performance in the Singapore office sector has continued to display resilience on the back of strong occupancies too,” said Tricia Song, Head of Research, Southeast Asia for CBRE.

Although the supply pipeline of new office space remains limited in Singapore, notably, green buildings adoption rate in Singapore reached approximately 70% in 2022, well above the 40% recorded in Hong Kong SAR. Singapore also continues to invest more in research and development and leads in high-tech manufacturing.

Moray Armstrong, Managing Director of Singapore Advisory Services for CBRE, concludes, “For decades, both cities have been rapidly growing in large measure down to the competitive spirit engrained in both centres’ industrious population. It is hardly surprising that a perception of some kind of race to be the leading hub in Asia is never far from the surface. The reality is that both hubs have great positioning, but with slightly different value propositions. For companies covering the whole of Asia it is rarely a choice one location to the exclusion of the other.”

Mr Armstrong continues, “We see in the report that while Hong Kong SAR may be stronger in Finance from some key metrics whereas Singapore has ascendancy in Technology. Hong Kong SAR is generally held to be the gateway to the North Asia market, but Singapore is an established hub for ASEAN and India. In effect, the two centres are complementary. As MNC’s set out pan-Asia strategies having a strong presence in both hubs ensures that the organisations will be ideally set to capitalise on Asia’s wider growth opportunities.”

To read the full report, click here.