Hong Kong’s real estate market is famously one of the most expensive in the world alongside the likes of New York, London, and Sydney. Nonetheless, crypto startups are setting up camp in some of the most valuable skyscrapers in the city.
BitMEX, a popular P2P crypto-products trading platform that facilitates Bitcoin and Ethereum margin trading, moved its headquarters to Cheung Kong Center’s 45th floor, renting out a total of 20,000 square feet at the rate of $28.66 per square foot. The exchange moved to the exclusive high rise located at 2 Queen’s Road, Central, from Victoria Harbor, a region known for expensive residential properties within Hong Kong. BitMEX paid around $3.18 per square foot for their property in Victoria Harbor while they are paying $573,200 per month, at a rate of $28.66 per square foot for the Cheung Kong Center.
Cheung Kong Center which is the most valuable skyscraper in Hong Kong boasts an impressive list of major financial institutions operating within it such as Bank of America Corp, Barclays Plc, Bloomberg LP, Goldman Sachs Group Inc and the Securities and Futures Commission of Hong Kong.
Kicking the banks out
SCMP, a mainstream media outlet in Hong Kong released a report recently which stated that the rising rental fees have forced even major banks like Goldman Sachs and BNP Paribas to explore cheaper locations for their offices in Hong Kong. Hong Kong Central boasts Annual office rental costs that easily surpasses London’s West End and Beijing’s Finance Street at the rate of around US$307 per square foot a year. BitMEX and Diginex Global, two crypto startups based in Hong Kong are paying $1.3 million per month to rent out a total of 72,000 square feet.
Philip Pang, an associate director of office services at Colliers, told SCMP that “Blockchain companies show no signs of slowing their expansion in Hong Kong. These firms are leasing space in top-tier office buildings to attract and retain talent.”
The report from SCMP also revealed that Goldman Sachs is looking to save 30 percent on rent by relocating from Hong Kong Central to Causeway Bay in the next few months. BNP Paribas has also moved its office to Swire Properties’ Taikoo Place. While the Quayside in Kwun Tong near Victoria Harbor has been leased by JPMorgan, the cost of rent will be nowhere near what BitMEX will be paying for Cheung Kong Center.
Apprehensive Landlords
Cryptocurrency-related businesses have prospered over the past nine months, even though the valuation of the crypto market fell by 80 percent. Exchanges in specific have continued to generate large revenues.
However local publications reported that Cheung Kong Center demanded an upfront payment of a year’s rent from BitMEX, which is estimated to be $6.8 million, demonstrating the lack of confidence in crypto-related businesses by Hong Kong’s major landlords.
Denis Ma, head of research at Jones Lang LaSalle said that “It’s pretty common for landlords to ask for larger deposits from tenants with weaker covenant strength. Landlords are always open to taking on new tenants, it’s just a matter of balancing rent against flight risk”.
SFC chairman Tells Hong Kong’s Security Watchdog to Propose Crypto Regulation
According to the English newspaper, the South China Morning Post (SCMP), Hong Kong’s securities and futures commission (SFC) is planning to introduce crypto regulation to protect investors. The chairman of SFC, Carlson Tong Ka-shing, said in an interview with the publication that a ban on cryptocurrency platforms is not in consideration while adding that they don’t think that a total ban is “necessarily the right approach”. “It will not work in today’s internet world when trading can cross national boundaries. Even if we were to ban them, transactions can still be easily conducted via platforms in overseas markets.”
The chairman added that a regulatory body and legal frameworks to control the industry is in consideration, but the organisation will be cautious as these platforms are “new technologies” and cannot be treated as securities. Even though Cryptocurrencies do not fall under the SFC’s current requirements, Tong proposes equating them to traders, “We need to see if and how these platforms can be regulated to a standard that is comparable to that of a licensed trading venue, while at the same time ensuring investors interest are being protected”. The exchanges that are working in Hong Kong’s market seem to have welcomed the landmark move. BitMEX chief operating officer Angelina Kwan stated that the regulatory authority can help to develop a new industry.
Follow us on Twitter, Facebook, Steemit, and join our Telegram channel for the latest blockchain and cryptocurrency news
