Hong Kong: Cryptocurrency Startups Splurge on Rent to Attract top Talent
Despite the bearish cryptocurrency market, cryptocurrency exchanges and investment funds are proliferating and keen to attract talent by renting out the priciest top-tier office buildings in Hong Kong. According to a South China Morning Post report published on September 28, 2018, these offices in Hong Kong’s Central District are even more expensive than offices on Beijing’s Finance Street or London’s West End.
Crypto Companies Are Growing Fast in Hong Kong
According to Colliers International, cryptocurrency companies like Diginex Global and BitMEX have agreed to sign up for a total of 72,000 square feet of space in Hong Kong’s Central District in 2018. With rent costing approximately $307 per square foot per year, emerging cryptocurrency and blockchain companies are paying roughly $1.3 million per month.
Philip Pang, an associate director from Colliers International Office Services, noted that blockchain companies are growing fast and quickly expanding in Hong Kong. Blockchain and cryptocurrency-related companies are keen to splurge on rent and location, even when larger financial institutions such as BNP Paribas and Goldman Sachs Group have sought for cheaper rental space.
Goldman Sachs is in the process of relocating their employees from The Center in Hong Kong’s Central District to Lee Gardens after Three in Causeway Bay when their lease expires. The move will significantly reduce their expenses, allowing the company to save approximately 30 percent of their leasing fees, as reported by SCMP in April.
Last month, cryptocurrency trading platform BitMEX shocked the fintech community when it rented out the entire 45th floor in the Cheung Kong Center. According to SCMP, the Cheung Kong Center cost BitMEX $225 per square foot per month, making it the world’s most expensive offices.
For a startup that was founded in 2014 and is only four years old, BitMEX is extremely optimistic about the future of cryptocurrencies and blockchain technology. The company also has to pay a year’s rent upfront to secure their office in the Cheung Kong Center.
Further Expansion Will Increase Office Demand and Rent
Colliers International reported that, while Bitcoin and Ethereum have dropped 68.1 percent and 86.3 percent respectively, since their all-time high in December 2017, blockchain-related companies are expanding quickly due to the market’s quick adoption of the new technology.
Since most of these cryptocurrency and blockchain-related companies are at an early stage, they will continue to expand and grow, which will lead to an increase in office demand and rent in Hong Kong’s Central District over time.