Cigna Worldwide Life Insurance has become the latest multinational to flee the rising costs of Hong Kong island office space for Kowloon’s more budget-friendly shores, according to local media reports.
The US-based insurer is set to become neighbours with HSBC and WeWork at Mapletree Bay Point in Kwun Tong after it relocates to the year-old commercial project from its current home in Admiralty, as reported by the Hong Kong Economic Times.
Move to Kowloon Helps Insurer Cut Rent 50%
Cigna will take up an entire lower floor in the 19-storey grade A office tower developed by Temasek-backed Mapletree Investments. The 35,000 square feet of office space will be leased at HK$30 per square foot, for a monthly office rent of HK$1.05 million ($134,000).
According to Hong Kong real estate website Click.com, the monthly rent at 28 Hennessy Road is around HK$68 to HK$75 per square foot, more than two times of the unit price of HK$30 per square foot of Cigna’s new site in Kowloon East.
The relocation will combine allow Cigna to combine operations from the company’s Hong Kong headquarters on the 15th floor of Swire Properties’ 28 Hennessy Road, Admiralty as well as from space on the 10th floor of One Landmark East in Kowloon East, which is located 15 minutes walk southeast of the company’s new home. The insurer had been occupying a total of approximately 19,351 square feet (1,797 square metres) of space across the two locations.
Cigna Joins Kowloon East Finance Club
Cigna’s migration will make it the new neighbour of HSBC, as well as co-working giant WeWork and apparel maker VF Corporation.
HSBC was reported to have leased some 70,000 square feet across two floors in the building for HK$35 per square foot in early June.
Meanwhile, VF Corporation took up 10,500 square feet between the eighth and tenth floors for HK$25 per square foot in January and WeWork leased 36,000 square feet space in a lower floor for the same price.
“We are starting to see the emergence of a financial cluster along Wai Yip Street, which includes Mapletree Bay Point, with a number of international banks including Citibank, JPMorgan, DBS and HSBC also setting up sizeable offices in the area,” observed Denis Ma, head of research at JLL. “Kwun Tong is part of the broader Kowloon East market that the government envisions to be a future second CBD,” he explained.
Mapletree Sale Gets a Boost
The new lease may help spur a sale of the property by Mapletree Investments, which was reported in June to have put the 19-storey Bay Point office tower on the market. Last week, a market source told Mingtiandi that Chinese financial conglomerate Zhongrong Holdings Group is offering a bid for HK$9 billion (approximately HK$13,630 per square foot) for the Singaporean developer’s newly built office building.
According to the source, there are several other financial groups interested in bidding for Mapletree Bay Point. The Kwun Tong office market has become one of the most popular destinations for en bloc office investments in recent years with Chongqing-based CC Land bought Nan Fung Group’s Octa Tower for HK$8 billion in June this year.