APAC-BFSI-Outlook-2017

MARKET OVERVIEW HONG KONG BANKING AND FINANCIAL SECTOR SUMMARY

204.84

15.0% 30%

47%

Prime Rent* (USD/Sf/Year)

Rental Growth (YOY in local currency)

% Occupancy by Financial Sector (Overall)

% Occupancy by Financial Sector (CBD)

Banking and Financial Sector Trends In 2016, mainland Chinese banks and financial institutions continued to be major players in the Hong Kong Grade A oŸce leasing market. However, a slightly negative absorption rate has been recorded in the core areas, reflecting the slowdown of expansion and/or relocation of multi-national corporations (MNCs) in this sector. A clear pattern of decentralization can be observed among these companies. For instance, in the first quarter of 2016, Mizuho Bank announced its relocation from Prime Central to K11 in Kowloon and Hong Kong South. In 2014 and 2015, Greater Central recorded 0.7 million sf (msf) of new leases annually. Mainland companies’ share of major new leases in Greater Central (CBD) grew dramatically from 13% to 44% in the same period.

Outlook, Opportunities & Strategies for Occupiers No major oŸce project are expected to be launch in Greater Central next year. Despite the slight increase in available space in Greater Central, availability in Prime and Grade A buildings is expected to remain tight amidst ongoing demand from mainland financial institutions, while rents are expected be stable in the coming 12 months. It is believed that Greater Central will continue to empower landlords in terms of tenant selection and rental negotiations. The expected launch of the Shenzhen–Hong Kong Stock Connect in 2016 will further support the Hong Kong financial sector. Mainland financial institutions will remain the primary driver of the o…ce leasing demand in Greater Central. - John Siu, Managing Director

Key Banking and Financial Services Sector Lease Transactions – 2016 PROPERTY SF TENANT

TRANSACTION TYPE SUBMARKET

One Exchange Square

53,700 HKEX

Renewal

Greater Central

One Island East

39,800 Accenture

Consolidation

HKE

Three Pacific Place

15,000 NG Wholesale Bank

Relocation

Greater Central

Two Exchange Square

13,900 Orix Asia

Consolidation

Greater Central

Two Exchange Square

13,100

Julius Baer

Expansion

Greater Central

AIA Central

12,600 China Minsheng Investment

Expansion

Greater Central

Three Exchange Square

12,200 China Zheshang Bank

New Set-up

Greater Central

Key Banking and Financial Services Sector Sale Transactions – 2016 PROPERTY SF BUYER PRICE (US$ MIL) PRICE (US$/SF)

SUBMARKET

One Harbour Gate East Tower 280,000 Cheung Kei Group 577

2,071

Kowloon Others

Dah Sing Financial Centre

400,571

China Everbright

1,289

3,217

WC/CWB

* Prime Central

42 ASIA PACIFIC BFSI OUTLOOK 2017