Second opinions: How will CBD2 in Kowloon East transform Hong Kong for businesses?

06/29/2021


Peter C.W. Choy FCPA, Managing Director, TPJ Management Consultancy Limited, and Convenor, the Institute’s Property, Infrastructure and Construction Interest Group

“Energizing Kowloon East” was announced by the Chief Executive of Hong Kong in the 2011-12 Policy Address, and will see the transformation of an area that was predominately industrial into a business area as Hong Kong’s second central business district (CBD2). The plan will transform Hong Kong in three main ways. 

Geographical: Kowloon East has a favourable geographic location and is well connected to other parts of Hong Kong through the MTR and road networks. The recently opened MTR’s Tuen Ma Line, running from Ma On Shan to Tuen Mun, further connects Kowloon East and makes it convenient to travel to different areas in Hong Kong.

As well as connections, there are a lot of land reclamation areas, which is ideal for new town planning. In the future, a satellite new town will be built in the area with new residential and office buildings and government offices, increasing the local population and helping to alleviate Hong Kong’s housing shortage.

Economic: Hong Kong, a financial and trade centre, is one of the most developed economies in the world with a high per capita income. With its special relationship with Mainland China, Hong Kong has attracted many multinational corporations to base their regional headquarters in the hope of entering the Mainland market.

The new business areas in Kowloon East, with new GradeA office space designed with energy efficiency in mind, offer a favourable business environment for corporations to set up their Asia-Pacific headquarters.

Social: Hong Kong is a melting pot of East and West, and the government has proactively promoted the development of a diverse and social culture through the peaceful coexistence of its citizens. 

The new cultural and sports venues in Kowloon East will allow the government to organize social, sport and cultural events, strengthening Hong Kong’s status as Asia’s world city. Events will help serve as a platform for all of Hong Kong’s residents, be they local or expats, to get along with one another and develop a harmonious atmosphere.  


“The new cultural and sports venues in Kowloon East will allow the government to organize social, sport and cultural events, strengthening Hong Kong’s status as Asia’s world city.”


Anthony Lin, FCPA, Financial Controller, Gammon Construction Limited

Gammon Construction Limited is one of the companies that holds a strong belief in the “Energizing Kowloon East” initiative and moved our headquarters from Quarry Bay to Kowloon Bay in 2019. Apart from a new building, quality floor space, and the green environment in the nearby area, this new office is much closer to some of our major construction sites and clients, as well as our Tseung KwanO Technology Park Office. This makes travelling and meeting our teams and clients much more efficient.

The development of CBD2 will not only revitalize the area, but also help to transform Hong Kong for business in a couple of ways:

Strengthen Hong Kong’s competitiveness as a financial hub: CBD2 will have roughly double the commercial floor space of Central. Grade A office space in Kowloon East will be 17.2 million square feet by 2021 and reach 29 million square feet upon the completion of the Kai Tak Development. The area is expected to become the head office location for multinational corporations and financial institutions, instead of only the back office location. 

Propel the smart city of tomorrow: CBD2 will be a crucial pilot for the implementation of various smart city elements, which will be rolled out to the rest of Hong Kong when appropriate. Several proof-of-concept trials have been implemented in Kowloon East to demonstrate the benefits of smart city developments and to provide a better understanding of the feasibility of wider application. These trials include a smart crowd management system, a personal and preference-based way-finding for pedestrians, an energy efficiency data system, solar-powered traffic sensors, a kerbside loading/unloading bay monitoring system, a smart recycling bin system, multipurpose lamp posts, real-time road works information, and a smart parking system.

Transformation is never easy, particularly in an industrial area, but we’re gradually seeing the vision of “Energizing Kowloon East” being realized. Kowloon East will turn into a more vibrant and dynamic environment, which will help Hong Kong attract talent and investments, boost investor confidence, and rebuild our unity. 


“The area is expected to become the head office location for multinational corporations and financial institutions, instead of only the back office location.”


Martin Wong, Director, Head of Research & Consultancy, Greater China, Hong Kong, Knight Frank

Kowloon Bay, Ngau Tau Kok and Kwun Tong were once the industrial heartland of Hong Kong. When the nearby Kai Tak Airport closed in 1998, the older industrial areas were ripe for urban renewal. Since then, a greater vision for Kowloon East has emerged. 

In the past couple of years, the transformation of Kowloon East into a CBD2 of Hong Kong has been taking shape. Alongside the plans for the adjoining Kai Tak Development, CBD2 spans over 320 hectares, with new offices at the site of the former airport, the Kwun Tong Business Area and the Kowloon Bay Business Area.

The area has witnessed the rapid growth of an important high-grade office building cluster of over 19.8 million square feet of commercial floor space, accounting for 23.2 percent of the total Grade A office stock in Hong Kong. 

Kowloon district has long been considered a cost-saving alternative for office space compared to the traditional central business district. The average office rents in Kowloon East has been about a quarter of that in Central. Kowloon East will continue to be attractive as it develops, with over 7 million square feet of future supply to come, offering plenty of options for office tenants. Including the Kai Tak Development area, the CBD2 is envisioned as Hong Kong’s largest commercial district overtaking the existing CBD on Hong Kong Island.


Supported by the development and accessibility improvements, CBD2 has the potential to transform into a premier business district in Hong Kong. Furthermore, Kowloon East has been promoted as a smart community with lots of low carbon buildings. Forty-nine projects in Kowloon East and San Po Kong Business Area have acquired BEAM Plus New Buildings Gold or above as of June 2021. With environmental, social and governance initiatives being a hot topic for both landlords and tenants, we expect CBD2 to have an increasingly dominant position within Hong Kong’s office marketplace.


“Kowloon East will continue to be attractive as it develops, with over 7 million square feet of future supply to come, offering plenty of options for office tenants.”