Quarry Bay in Hong Kong. Photo: iStock

The Securities and Futures Commission may have won many battles against big corporations but it has not been able to beat the savage rents needed for prime office space in Hong Kong.

The securities watchdog has been forced to retreat to Quarry Bay from next year. It will be shifting to Island East, a 15-minute drive from Central after officials decided to leave the Cheung Kong Center, owned by the city’s richest man Li Ka-shing.

The commission revealed yesterday that it will save HK$1 billion (US$128 million) by moving to an office with an eight-year lease at half the existing rental – and that will become the deposit for eventually buying an office.

“We have not given up the plan to buy our property,” SFC chairman Tim Lui Tim-leung told the Legislative Council’s Financial Affairs Panel.

The commission, which has 900 staff, found it hard to buy an office of the size it needs – 180,000 square feet – based on its HK$3 billion budget.

The publicly funded watchdog has paid HK$200 million in annual rent to Cheung Kong Holdings since 2013.

It has been credited with maintaining a high standard of corporate governance and making Hong Kong the world’s top center for raising funds for Chinese corporates, which make up more than half of the local market’s capitalization.

Despite its success in corporate oversight, the agency has been unable to remain in the core district given the exorbitant office prices and restraints on land availability.

Remarkably, even top entities like Goldman Sachs and accounting firm KPMG have had to move some of their operations outside Central.

Most Grade-A offices cost between HK$100 and HK$200 per square foot to rent, although some space at the International Finance Centre II, the highest building in Central with sea views, costs even more.

Real estate in Hong Kong has been in high demand thanks to an influx of Chinese financial institutions, from boutique funds to state-owned banks, rushing to set up offices outside the mainland.

Grade-A offices in Central or nearby districts like Admiralty and Sheung Wan now sell for between HK$38,000 and $50,000 per square foot.

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