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Hong Kong holds edge over Singapore as top business hub thanks to availability of talent and ample supply of office space: research

A study released by property consultancy CBRE on Tuesday rates Hong Kong and Singapore across seven broad categories. Photo: AFP

SINGAPORE (EDGEPROP) - A study rating perennial rivals Hong Kong and Singapore as business hubs gives the overall edge to Hong Kong thanks to factors such as its financial prowess and talent pool, while pointing out Singapore's advantage in technology and detailing shifts in the two cities' office rental markets.

The study, released by property consultancy CBRE on Tuesday, rated Hong Kong and Singapore across seven broad categories. Hong Kong came out on top in three: the scale of its financial industry, its availability of talent and its ample supply of office space.


Singapore took the honours in two areas: the scale of its technology industry and its efforts in ESG (environmental, social and governance) initiatives and green building. Two categories - influence in Asia-Pacific and office rents and prices - proved too close to call.

"Hong Kong SAR and Singapore are both firmly established as popular locations for multinational corporates to locate their Asia-Pacific headquarters," the study said.

People cross a street in the Central Business District (CBD) in Singapore on February 13, 2023. Photo: EPA-EFE 

As a business hub, the study pronounced Singapore's economy more diversified than Hong Kong's, as the service sector in Hong Kong, including financial, insurance and trading, accounts for more than 90 per cent of the city's economic output.

In 2020, due to the impact of the Covid-19 pandemic, Singapore's real gross domestic product (GDP) hit US$374 billion ($496 billion), overtaking Hong Kong at US$362 billion.

Both cities play important roles in terms of connectivity, albeit covering different regions, as Hong Kong is a regional hub for China and North Asia while Singapore is more central to the fast-growing economies of Southeast Asia, the report said.

The GDP of the economies within a four-hour flight of Hong Kong is US$28 trillion, while Singapore's four-hour sphere encompasses US$7 trillion, the report said.

As of June, the number of multinational corporations maintaining regional headquarters in Hong Kong had fallen 5% compared with June 2019. However, there is "limited evidence of a massive corporate migration out of Hong Kong", CBRE said, adding that an 18% increase in the number of mainland companies in the city in the same span offsets any decline.

Hong Kong is likely to become the largest private wealth management centre and is tipped to overtake Switzerland in 2026, the report found. The city held the Wealth for Good summit in March as part of an effort to convince at least 200 family offices - the private companies wealthy families set up to manage investments and philanthropic efforts - to choose Hong Kong as their base by the end of 2025. Hong Kong has exempted family offices from profit taxes since December.

However, Singapore outpaces Hong Kong in terms of research and development spending, investing almost 2% of its economic output, compared with 1% in Hong Kong, CBRE said. Hong Kong is "catching up" with Singapore in terms of technology capabilities by "deepening collaboration with Shenzhen and the Greater Bay Area", CBRE said.

Singapore attracted more talent last year, while Hong Kong experienced a net outflow. A 13% increase in foreign workers in 2022 contributed to an increase in residential rents in Singapore, but the number of foreign workers remained below 2019 levels, CBRE said.

Singapore boasts more science and technology workers, while Hong Kong possesses a deeper financial talent pool. Competition between the two cities for skilled workers is bound to intensify in coming years as both have implemented new visa programmes to attract talent.

The tie in terms of office rents came about because Singapore rents have risen by 43% over the past three years, while Hong Kong's "registered their steepest decline in a decade in 2022".

A surge in office-space supply in Hong Kong is also likely to further weigh on rents, the study said. Total office stock in Singapore is only 73% of that in Hong Kong, which is set to add another 10% to its existing stock between this year and 2026. Singapore, meanwhile, will add 7% to its existing office supply.

Hong Kong offers a more diverse range of commercial areas than Singapore, but the latter plans to accelerate decentralisation from its central-business district by developing satellite business areas over the next 20 years.

"Despite the narrowing rental gap, Singapore remains a top destination for global tech companies planning to set up corporate Asia-Pacific headquarters," said Ada Choi, the head of occupier research for Asia-Pacific at CBRE. "However, higher living costs, particularly residential rents, are weighing on relocation decisions by global talent. Corporate occupiers in Hong Kong should move quickly to secure more attractive leasing terms while availability remains high and the market continues to favour tenants."

In terms of commercial property investment, investors continue to be attracted to Singapore's office properties due to their stable returns and solid price performance, said Henry Chin, the global head of investor thought leadership and head of research for Asia-Pacific at CBRE.

"Deeply discounted office assets in Hong Kong also offer favourable prospects for value-oriented investors," he said. "In the coming months, the debt funding gap for Hong Kong offices, resulting from interest rate hikes and weakening capital values, could trigger more discounted sales and create other attractive prospects for buyers."

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