(Bloomberg) — Hongkong Land Holdings Ltd., the biggest landlord in the heart of the Asian financial hub, signed a lease with a crypto asset firm for the first time as the century-old company moves to embrace the emerging sector.
Hong Kong-based HashKey Group will take up a floor in Three Exchange Square owned by Hongkong Land, the real estate firm said in a statement Wednesday.
The lease represents an evolution of the company’s portfolio in the Central district that brings together traditional financial institutions with blockchain and virtual asset firms as demand for space from foreign banks declines amid the pandemic.
“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,” said Neil Anderson, director and head of office, commercial property at Hongkong Land, referring to the city’s finance regulator.
The move will be an upgrade for HashKey, which is currently based in the Cyberport startup business park. Australia & New Zealand Banking Group Ltd. was the previous tenant of the space in Three Exchange Square. HashKey also has operations in Singapore, Tokyo and Shanghai, according to its website.
“Three Exchange Square is one of the most prestigious office buildings in Hong Kong and we are glad to be moving to the center of the business community,” said Michel Lee, executive president at HashKey.
Read more: Hong Kong Landlord Sees Robust Demand for Central Offices
Central, ranked as the world’s most expensive office district, has long been dominated by traditional financial institutions from overseas and mainland China. However, as hybrid workplace arrangements and cost-saving measures take hold during the pandemic, demand from foreign banks has declined.
Lenders including Standard Chartered Plc and BNP Paribas SA have been reducing their office space in the finance district over the past year. 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.
Banking, asset management firms and other financial services constituted 42% of Hongkong Land’s office tenant profile by area as of June.
Hongkong Land is relatively late in accepting crypto companies to its portfolio. CK Asset Holdings Ltd. signed trading platform BitMEX in Central’s Cheung Kong Center for a reported world-record rent in 2018.
The real estate company expects to see more virtual asset companies expanding in 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,” Anderson said.
©2021 Bloomberg L.P.