Can Hong Kong become a tech hub?

August 4, 2014 / By  

The Information and Communications Technology (ICT) sector has been one of the fastest growing occupier groups in US and European office markets over the past 6-months with technology companies now starting to move into some of the most highly sought after addresses in cities such as New York and London. In many instances, they are competing with banking and finance companies, an industry that is still in the midst of ‘rightsizing’.

In recent months, ICT companies such as Capco, Facebook, Qihoo 360 and an array of online gaming developers have either expanded or set up new offices in Hong Kong. However, the scale of their requirements remains small when compared with their counterparts overseas. New lettings from the sector accounted for less than 7% of all floor space leased in 1H14.

One of the reasons why we are not seeing as much growth from the sector compared to other cities is because these companies continue to largely open offices in Hong Kong for sales and marketing purposes.

However, the tide may be changing.

Local press recently reported that Giant Interactive–one of China’s leading online game developers–plans to delist from the New York Stock Exchange and relist on the local bourse sometime next year. One of the reasons why Chinese technology companies are considering a move to list on the Hong Kong exchange is the stronger valuations that can be achieved since local investors typically have a better understanding of the regional markets in which these companies operate. Others, such as Qihoo 360, are in Hong Kong as active investors in the city’s financial market. The mainland company, which is known for its antivirus software, has been a cornerstone investor in three IPOs in Hong Kong in recent months.

If these examples are the beginnings of a new trend, in the future we may potentially see more ICT companies setting up sizeable offices in Hong Kong that serve business functions beyond sales and marketing.

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