Hong Kong is flexible. The glittering skyscrapers of Central are a testament to the city’s ability to reinvent itself. It wasn’t that long ago in developmental years that our humble SAR was a fishing village, and then a manufacturing town of everything from shoes to kitchenware to toys. In the way the industrial revolution ushered in a sea change for urban centres around the world, the technology industries are doing it again now. And some locations are better prepared for the future than others.
The impact new technology and its cottage industries are having on property is already being felt. The wise money in Hong Kong is in industrial property, and new buildings are getting smarter every day. Not only do blue chip tenants want more green properties to choose from, blue chip tenants are increasingly tech firms. Depending on your source, information technology, software, online services and the creative industries now make up the bulk of London’s economy — not finance and banking — and that is becoming the norm around the globe.
In March Savills released its Tech Cities report, similar to its 12 Cities survey that determined the locations that best exemplified and demonstrated major trends in property. Tech Cities, however, zeroes in on the locations that are best suited to the burgeoning industries of the future. Hong Kong acquits itself well enough, but there’s room for improvement.
Savills’ tech 12 are Austin, San Francisco, Tel Aviv, New York, Stockholm, London, Singapore, Dublin, Berlin, Hong Kong, Seoul and Mumbai. Each has a large and growing tech sector and ranks high on lists for multinationals looking for space. “Real estate professionals have started to register differences in accommodation requirements and pricing points in this sector — but most seem to be thinking mainly in terms of building types and the design of offices for big ‘supra-national’ tech companies,” said Savills. Equally important is the city itself. The young, hip, labour the industries attract have high standards when it comes to life outside the office, and cities that hope to stay competitive need to offer something other than fast Internet and a swanky lunch room.
Savills five criteria for a city’s tech-friendliness were business environment (meaning how attractive it was to start-ups, innovation, connection and regulations), tech environment, quality of life (working hours, culture and leisure, cost of living, stability, pollution), available talent and, of course, property costs. Top-ranked Austin boasts hip festivals, a small town-big city vibe, rich culture, affordable property (though that’s rising) and a vast talent pool. Hong Kong rivalled London, New York and Singapore for business and tech environment, but dropped the ball on quality of life and property costs. “Hong Kong’s ability to attract this workforce is most severely impaired by its performance on ‘Quality of life’ measures, particularly when it comes to pollution, commute times or, more specifically, transport modes — the city is not easy to cycle in,” said the report (hipsters love cycling). Bizarrely, Hong Kong clocked the longest commute time (41 minutes) of the 12
It’s no surprise that real estate costs are the city’s weak link. It has the most expensive property costs and the highest live/work cost per employee (nearly US$80,000 per year). But the SAR’s lowly position may not be as dire as it seems. “The fact that Hong Kong has made it into our global top 12 tech cities list at all is an achievement in itself — so it certainly can’t be called ‘weak’ in this respect,” argues Paul Tostevin, associate director for world research at Savills in London. “All our 12 cities have thriving and growing tech sectors and are at the top of the shopping list for expanding tech companies to locate. Hong Kong is one of Asia’s most important tech hubs.”
Tostevin points out Hong Kong has some of the best tech infrastructure in the world, with fast and relatively inexpensive (at least for now) broadband, low corporate taxes, an environment favourable to new business and arguably the world’s best airport. “Growth in the sector will fuel demand for affordable office space for starups and ‘scale ups’. It is notable that the hub of creative tech in Hong Kong is Sheung Wan with its fine-grain streets, cafes and restaurants,” he says. He’s right of course. If any part of Hong Kong has a street life vibe and a so-called café culture, it’s Sheung Wan.
The market is responding, however. Co-working spaces — a shared office — have sprung up across the city in Central as well as more affordable Kowloon, Tin Hau, Kennedy Town and Cyberport (obviously). Swire Properties launched blueprint in Cornwall House at Taikoo Place earlier this year as a co-working space designed specifically for tech startups. Hong Kong is going to need more spaces like it if it hopes to continue to match the likes of über-hip Austin, San Francisco and Berlin. There’s more to it than low taxes. As Tostevin sees it, the pros of the being cool in its own way versus the cons of pollution and living costs are the back and forth employers looking for talent are fighting. Tostevin finishes with a recommendation for more transport infrastructure — which is indeed forthcoming — and a refrain we’ve heard before. “Investment in … urban environment and human scale development may help combat [these challenges].”