Hedge fund firm Dymon Asia Capital is expanding in Hong Kong’s central business district, at a time when the city is seeing record premium office vacancies and declining rental rates.
Dymon has signed a lease for a 7,000 square-foot (650 square-meter) office in Edinburgh Tower in the Landmark commercial complex owned by Hongkong Land Holdings H78 Ltd., said Kenneth Kan, Singapore-based deputy chief executive officer. The new space can seat more than 70 employees, double what its current office in the Nexxus Building can accommodate, he added.
The vacancy rate of grade-A offices in Hong Kong hit an all-time high of 16.7% at the end of March, while rents declined for the 20th consecutive quarter, according to a CBRE Group Inc. report. New supply combined with cost cutting may lead to more empty premium office space and keep pressure on rental rates, it added.
Dymon has occupied the Nexxus Building office since 2016 and has more than 30 employees in Hong Kong, Kan said. The US$2.5 billion ($3.37 billion) multi-strategy hedge fund returned an estimated 10% in the first five months of this year.
Out of nearly 15 portfolio managers it has hired since the start of 2023, 40% have chosen to be based in the city, even though they were offered the option of working in its other locations, including Singapore, Tokyo, Mumbai and Shanghai, Kan said.
“With a growing pool of talent choosing to work in Hong Kong, this necessitated the need for a larger office, prompting us to search for a suitable space earlier this year,” Kan added. “Hong Kong remains a key market for Dymon Asia, and we will continue to grow our team here.”
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Shares of Hongkong Land, Central’s biggest commercial property landlord, rose as much as 3.6% in Singapore trading on Tuesday, the biggest intraday gain in two weeks.
Hong Kong has been trying to lure back talent and firms after stringent Covid-era restrictions, geopolitical concerns and China’s economic slowdown led to an exodus. Such government efforts have been complicated by harsh economic realities.
A lack of investment banking deals has prompted some international financial firms to shrink office space. Hong Kong’s proceeds from initial public offerings in the first quarter were the lowest since 2009. Bank of America Corp. cut more than one floor in Cheung Kong Center in Central to move some of its staff to a cheaper location, Bloomberg News reported in March.
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Mainland Chinese companies, once the city’s most aggressive tenants leasing premium offices, are not rushing in either. They represented only 8% of the new leases in the first quarter, data from CBRE show.
On the asset management side, Hong Kong has traditionally been the region’s top hedge fund hub. China-focused hedge funds have on average returned 1.1% this year, a long way from recouping their losses since 2021, according to a Eurekahedge Pte gauge.
Dymon plans to move into its new office early fourth quarter. Kan declined to disclose the length of the lease and the rental rates, citing a confidentiality agreement.
