Hong Kong’s Central district’s largest landlord, Hongkong Land Holdings Ltd., signed a lease with its first crypto asset firm.
Hong Kong-based HashKey Group will occupy a floor in Three Exchange Square, which is owned by Hongkong Land. Previously occupied by Australia & New Zealand Banking Group Ltd., the space will be an upgrade for HashKey, currently based out of the Cyberport startup business park. Besides Hong Kong, HashKey also operates in Singapore, Tokyo and Shanghai.
The lease represents an evolution of the company’s portfolio in the world’s most expensive office district. Crypto firms now have the clout to move into prime office space, as demand from foreign banks wanes amid the pandemic.
Hongkong Land’s delay
In spite of, or perhaps because of, being the largest landlord in Central, Hongkong Land is a relative latecomer to accepting crypto companies. For instance, CK Asset Holdings Ltd. leased a space in Central’s Cheung Kong Center to trading platform BitMEX in 2018.
Neil Anderson, director and head of office, commercial property at Hongkong Land, explained that a regulatory shift from Hong Kong’s Securities and Futures Commission prompted the change.
“The SFC’s recent decision to regulate digital asset exchanges in Hong Kong gives us confidence that this new asset class has a regulatory framework, and therefore a future within the finance industry,” Anderson said.
He added that the real estate company expects that more virtual asset companies will expand into the finance district. “Until recently, few of these firms had the scale to move into a prime central location but that is changing now and we are seeing an increase in inquiries from companies in the fintech space.”
Pandemic effects
Landlords in the office district long dominated by traditional financial institutions must also contend with the loss of that business. Demand from foreign banks declined as flexible working arrangements flourished, and office spaces languished during the pandemic.
For example, lenders such as Standard Chartered Plc and BNP Paribas SA reduced their office space over the past year. Meanwhile, the vacancy rate in Central rose to 9.6% at the end of July from 5.7% a year ago, according to data from Jones Lang LaSalle Inc.
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