Hong Kong and Singapore remain perennial rivals as business hubs, with the overall edge going to Hong Kong. The latter scored favourably on factors such as its financial prowess and talent pool, while Singapore trumped it on the scale of its technology industry and green building initiatives. Hong Kong and Singapore were neck-and-neck when it came to their influence in the Asia-Pacific and office rents and prices.

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Hong Kong possesses an edge over Singapore as a business hub, according to a study released by property consultancy CBRE on Tuesday. Factors such as Hong Kong’s financial prowess, talent pool and availability of office space give it the overall advantage, while Singapore still has an advantage when it comes to technology, and green building initiatives.

The tie in terms of office rents between the two cities likely came about due to Singapore rents rising by 43% over the past three years, while Hong Kong’s experienced the steepest decline in a decade in 2022.

While Hong Kong and Singapore remain close rivals, Hong Kong’s economy is much more concentrated in service-based industries, such as financial, insurance and trading, which accounted for more than 90% of the city’s economic output. Nonetheless, both cities offer important regional connectivity, albeit in different regions: Hong Kong being a regional hub for China and North Asia, and Singapore more centred on the fast-growing economies of Southeast Asia.

In 2020, the real gross domestic product (GDP) of Singapore overtook Hong Kong’s, at US$374 billion to US$362 billion respectively, due to the impact of the Covid-19 pandemic. However, there is “limited evidence of a massive corporate migration out of Hong Kong”, as CBRE pointed out, seeing as mainland companies in the city increased by 18% between June 2019 and June 2020.

Hong Kong also holds the potential to become the largest private wealth management centre and is even tipped to overtake Switzerland in 2026. The city’s Wealth for Good summit in March worked to encourage at least 200 family offices — private companies set up to manage investments and philanthropic efforts — to choose Hong Kong as their base by the end of 2025. Furthermore, Hong Kong has exempted family offices from paying profit taxes since December.

In terms of research and development, Singapore invests almost 2% of its output in the field, which is higher than the 1% Hong Kong invests. However, Hong Kong is “catching up” with Singapore in terms of technology capabilities by “deepening collaboration with Shenzhen and the Greater Bay Area”, CBRE said.

In terms of talent, Singapore attracted more last year but Hong Kong possesses a deeper financial talent pool. To draw new workers in, both cities have implemented visa programmes. But higher living costs, particularly residential rents, have weighed down relocation decisions by global talent in Singapore.

Both cities offer different commercial areas, however, Singapore plans to accelerate decentralisation from its central-business district over the next 20 years. Meanwhile, a surge of office-space supply in Hong Kong has further weighed down rents. Hong Kong’s total office stock of 73% is set to add another 10% to its supply till 2026, while Singapore will only add 7%.

This could create attractive prospects for buyers since deeply discounted office assets in Hong Kong offer favourable prospects for value-oriented investors. Investors are also drawn to Singapore’s office properties, thanks to their stable returns and solid price performance.

Ultimately, the business rivalry between Hong Kong and Singapore is likely to intensify with the two cities striking a balance between office rents, technology capabilities and talent. With renewed efforts by both cities to draw new investments and attract global talent, the competition between them is only just heating up.