ByteDance and CNPC acquire Hong Kong offices vacated by foreign companies

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Mainland Chinese companies have moved into premium office space in Hong Kong’s central business district, taking over major headquarters left vacant by foreign groups in the wake of the pandemic.

Byte Dancethe Chinese owner of social media platform TikTok and one of the country’s most valuable tech start-ups, is taking over some 16,000 square feet of office space in the city’s second-tallest office building from Swiss bank Julius Baer this year, which it is moving to a less central location, according to three people familiar with the deal.

A subsidiary of the state-owned China National Petroleum Corporation will move into a nearly 14,000-square-foot office in the central business district, according to two sources, after its previous tenant, flexible workspace provider Regus, owned by Switzerland-based IWG closed its center there.

Hong Kong has experienced an exodus of foreign companies due to its zero-Covid pandemic control measures, with many people moving to rival Singapore’s. Rents for prime office space in Singapore rose nearly 6% last year, while those in Hong Kong fell more than 6%, according to data from real estate firm Knight Frank. According to real estate agency Cushman & Wakefield, the Hong Kong office market is experiencing record vacancy rates of around 17%, with average rental prices in prime central office space falling from HK$165 per square foot in the April 2019 to around HK$105 by March 2023.

Mainland Chinese companies acquired about 29 percent of new leases in the Central District in the first quarter of this year, data from commercial real estate agency Colliers showed, up from 21 and 23 percent in full-year 2022 and 2021, respectively. .

Mainland companies find Hong Kong attractive as it is “still a global financial center,” said Rosanna Tang, executive director and head of research in Hong Kong at real estate agency Cushman & Wakefield. Banking, insurance and financial firms are among those on the mainland interested in new offices in the city, she added.

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Many foreign companies have also downsized and moved staff from the core business area to other areas, cutting costs and consolidating their offices, according to real estate agents.

Japanese bank MUFG and French lender BNP Paribas are among the foreign companies planning to shift staff from the central district to other areas of Hong Kong. FedEx, the US transportation and delivery company, is moving the staff and functions of its Asia Pacific headquarters to Singapore from Hong Kong. It will maintain an office in Hong Kong.

Multinational groups will likely continue to move out of the central district to save costs, according to Ada Fung, head of services, advisory and transactions at CBRE’s Hong Kong office. UBS will move its staff from Central to West Kowloon starting in 2026.

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Industrial and Commercial Bank of China (ICBC), one of China’s largest banks, is looking for a new office in Hong Kong to lease or buy and recently inspected two new flagship office buildings: Cheung Kong Center II by Li Ka-shing and Lee Shau -kee’s The Henderson – according to three people familiar with the matter.

United Energy, an oil and gas company controlled by Chinese tycoon Zhang Hongwei, will be the first tenant of Cheung Kong Center II, a source familiar with the matter said.

ByteDance confirmed the move. Julius Baer, ​​MUFG and BNP Paribas did not comment further on their moves. IWG, CNPC, ICBC and United Energy did not respond.