DBS joins global banks surrendering Hong Kong office space

DBS Group Holdings is set to join UBS Group AG and other global banks giving up office space in pricey Hong Kong with so many staff still working from home.

DBS is surrendering some floors in Swire Properties’s One Island East tower in Quarry Bay, according to people familiar with the matter who asked not to be identified because the information is private. The lender will release two of the eight floors it currently occupies, one of the people said.

A representative for the Singapore-based bank didn’t immediately comment. A Swire spokesperson said they don’t comment on rumors, adding that One Island East is 100% occupied as of Tuesday.

Southeast Asia’s biggest bank adds to the list of firms paring space in Hong Kong, one of the most expensive office markets in the world. Multinational firms, which are more likely to adopt flexible working arrangements than their local peers, accounted for 75% of the surrendered office stock last year, according to Cushman & Wakefield.

BNP Paribas SA and Standard Chartered Plc gave up floors in their Hong Kong headquarters in the past few months, while UBS relinquished a floor in Sheung Wan’s Li Po Chun Chambers late last year.

DBS said in November that employees would be given the flexibility to work remotely for as much as 40% of the time to address the changes brought on by the pandemic.

The moves mark another blow to the Hong Kong office market, where rents are expected to fall by 7% in 2021 as tenants look to reduce costs, according to Colliers International.

Rental rates in Hong Kong slumped 17% last year, the most since 2009, after the double whammy of anti-government protests and the pandemic, data from Savills show.

“The Covid-19 pandemic has prompted tenants to reconfigure their workplace and, in some cases, seek flexibility as part of their solution,” Alex Barnes, head of office leasing advisory at JLL in Hong Kong, said in an emailed statement this month.