A study comparing two of the most enduring adversaries Hong Kong and Singapore as business hubs has given the overall advantage for Hong Kong thanks to factors such as its financial power and its pool of talent, as well as highlighting Singapore’s advantages in terms of technology, and describing changes between the two offices rental markets of the two cities.
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The study, which was released by property consulting firm CBRE today, evaluated Hong Kong and Singapore across seven broad categories. Hong Kong came out on top in three areas: the size of its financial sector as well as its accessibility to talent and the abundance in office spaces.
Singapore was awarded the honors in two categories that are: the size of its tech industry as well as its involvement in ESG (environmental social, and governance) initiatives as well as green construction. Two categories of influence – the impact in Asia-Pacific and office rents as well as prices – were too close to draw a conclusion.
“Hong Hong SAR as well as Singapore are both well-established as prime destinations for multinational corporations to set up the Asia-Pacific office,” the study said.
A hub for business, the study found Singapore’s economy more diverse than Hong Kong’s. This is because the service industry within Hong Kong, including financial trade, insurance and trading makes up over 90 percent of the city’s total economic output.
In 2020, as a result of the effect of the Covid-19 pandemic Singapore’s actual gross domestic product (GDP) reached $374 billion ($496 billion) and surpassed 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 city that is a hub to China in addition to North Asia while Singapore is more central to the rapid-growing economics that are booming in Southeast Asia, the report stated.
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 total number of multinational corporations with local headquarters within Hong Kong had fallen 5% when compared to June 2019. However there’s “limited evidence of a huge company relocation out of Hong Kong”, CBRE stated, noting that the 18% growth on the mainland firms within the city during the same time frame will offset any decline.
Hong Kong is likely to be the biggest private wealth management hub and is expected to surpass Switzerland by 2026 according to a report. The city hosted an event called the Wealth for Good summit in March in an effort to convince 200 family offices – private firms wealthy families have created to oversee investments and charitable efforts to pick Hong Kong as their base at the end of 2025. Hong Kong has exempted family offices from paying taxes on profits from December.
In contrast, Singapore outpaces Hong Kong in the area of research and development investment by investing nearly 2% of its GDP which is compared to just only 1% of the population in Hong Kong, CBRE said. Hong Kong is “catching up” with Singapore in terms of technological capabilities thanks to “deepening cooperation and collaboration Shenzhen as well as in the Greater Bay Area”, CBRE declared.
Singapore has attracted more talent in the in the past year, and Hong Kong experienced a net outflow. A 13% growth in foreigners in 2022 prompted the rise in rents for residential properties in Singapore however the amount of foreigners was lower than the level of 2019. CBRE reported.
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 expected to grow in the next few years since both have introduced new visa programs that aim to draw talented people.
The tying in office rents was caused by Singapore rents have increased by 43% in the last three years and Hong Kong’s “registered the highest decline they have seen in the past decade during 2022”.
The increase in office space of office space Hong Kong is also likely to impact rents, according to the study. The total office inventory in Singapore is just 72% of the total in Hong Kong, which is scheduled to add another 10% to its current stock between the year 2026 and this one. Singapore is expected to increase 7.7% to its office supplies.
Hong Kong offers a more varied range of commercial zones than Singapore however Singapore will accelerate the decentralisation of the central business district through the development of satellite areas of business over the next 20 years.
“Despite the decreasing gap between rent and house prices, Singapore remains a top destination for tech companies looking to set up their headquarters in the Asia-Pacific office,” said Ada Choi director of research on occupiers in Asia-Pacific in CBRE. “However more expensive living expenses especially residential rents influence the decision to relocate by international talent. Companies that are occupying offices located 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 yields and strong prices, according to Henry Chin, the global director of investor thought leadership and director of research Asia-Pacific in CBRE.
“Deeply discount office properties located 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 a decline in capital values could lead to more sales at a discount and provide other appealing opportunities for purchasers.”