Hong Kong has an edge over Singapore as the leading business hub, study shows

A study of the long-standing competitors Hong Kong and Singapore as commercial hubs gives Hong Kong the overall advantage due to its financial strength and talent pool, while highlighting Singapore's advantage in technology and highlighting changes in the office rental markets in the two cities.

The study, which was published on Tuesday by the real estate consulting firm CBRE, evaluated Singapore and Hong Kong in seven major categories. Hong Kong won three of the categories: the scale of its financial industry, its availability of talent and its ample supply of office space.

The size of Singapore's technology industry and its efforts in ESG (environmental, social, and governance) programs and green building earned it top honors in these two categories. Influence in the Asia-Pacific region and office rents and prices both came down to the wire.

"Hong Kong SAR and Singapore are both firmly established as popular locations for multinational corporates to locate their Asia-Pacific headquarters," the survey stated.

The study concluded that Singapore is a more diverse economic hub than Hong Kong since more than 90% of the city's economic output is produced by the service sector in Hong Kong, which includes financial, insurance, and trading.

Due to the Covid-19 pandemic's effects, Singapore's real gross domestic product (GDP) reached US$374 billion in 2020, surpassing Hong Kong's US$362 billion.

The survey noted that whereas Singapore is more central to the rapidly expanding economies of Southeast Asia, Hong Kong is a regional hub for China and North Asia. Despite serving distinct regions, both cities play important roles in terms of connectivity.

According to the analysis, Singapore's four-hour sphere has US$7 trillion in GDP, while the economies within a four-hour flight of Hong Kong have a combined GDP of US$28 trillion.

Comparatively to June 2019, there were 5% less multinational businesses with regional headquarters in Hong Kong as of June. However, "limited evidence of a massive corporate migration out of Hong Kong" exists, according to CRBE, who also noted that an 18% increase in the number of mainland companies in the city during the same period offsets any decline.

According to the study, Hong Kong is predicted to surpass Switzerland in 2026 and will likely take over as the world's largest center for private wealth management. In an effort to persuade at least 200 family offices—private businesses affluent families set up to handle assets and philanthropic endeavors—to choose Hong Kong as their base by the end of 2025, the city organized the Wealth for Good summit in March. Since December, Hong Kong has exempted family offices from profit taxes.

According to CBRE, Singapore spends approximately 2% of its economic output on R&D, compared to Hong Kong's 1%. By "deepening collaboration with Shenzhen and the Greater Bay Area", Hong Kong is "catching up" with Singapore in terms of technological capabilities, according to CBRE.

While Hong Kong saw a net outflow of talent last year, Singapore attracted more. Although there were 13% more foreign workers in Singapore in 2022 than there were in 2019, CBRE reported that the number of foreign workers was still lower than in 2019.

By fLEXI tEAM