Hedge fund Qube to take six UBS floors in Hong Kong’s Central
Its new lease is the largest ever signed by a hedge fund firm anywhere in the city
[HONG KONG] Global multistrategy hedge fund firm Qube Research & Technologies has signed the second-largest prime office lease in Hong Kong’s Central business district in more than a decade.
The London-based firm is set to take as much as 146,000 square feet across six floors in Two International Finance Centre (IFC) being vacated by UBS Group, according to Murray Steel, Asia-Pacific chief operating officer. The lease will start in the first quarter of 2027, making it the largest tenant in the IFC complex, according to data from JLL, an adviser to the deal.
One of the fastest-growing hedge fund managers in recent years, Qube joins deep-pocketed financial firms to lock in leases at attractive prices.
A glut of new supply and cost-cutting at other companies have pushed up Hong Kong prime office vacancies and depressed unit rental rates.
Qube follows proprietary trading giant Jane Street Group, which in June agreed to take more than 223,300 sq ft in Henderson Land Development’s Central Yards project under construction on the Victoria Harbour waterfront.
Hong Kong office rents have slumped more than 40 per cent from their peak in the first quarter of 2019. Vacancy rates stood at 17.2 per cent in September, close to April’s 17.5 per cent, which was the highest level since records began in 2006, according to data from Colliers International.
Qube was spun out of Credit Suisse Group at the start of 2018 with US$800 million in capital and about 80 employees, focusing on quantitative trading. It has grown into a US$38 billion multi-strategy firm by earlier this year. Its new lease is the largest ever signed by a hedge fund firm anywhere in Hong Kong.
Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, is the largest occupier of office space in Two IFC, but owns the area that houses its staff as well as that of the International Monetary Fund, Hong Kong Mortgage and Bank of International Settlements, according to a past HKMA press release and JLL.
The Qube deal signals the Central area office market has bottomed out, according to JLL. It predicts Grade-A office rents in the business district to rebound as much as 5 per cent next year, after a 1 per cent dip this year, while rents in other areas of the city are projected to remain flat to 5 per cent down in 2026.
Five of Qube’s 13 offices are located in the Asia-Pacific region, home to about one-third of its roughly 2,000 global employees, said Steel. Since last year, it has expanded office space in Sydney, Shanghai, Singapore and Mumbai.
In Hong Kong, it signed deals this year to add four floors in Central Tower in stages by early next year, expanding its space in the building by 80 per cent to accommodate its growth before the move to IFC in 2027.
In addition to its traditional hedge fund strategies, Qube has also expanded its venture capital and power trading teams to the Asia-Pacific region, Steel said.
Hedge funds, private banks and wealth managers have been driving improved demand for office space in the second half. The net 1.6 million sq ft of office leased in the six months marks the highest since the first half of 2019, JLL said. Central and Tsim Sha Tsui across the harbour have led the recovery. Rental rates in the two districts edged up as much as 0.5 per cent in the period.
“This signals that companies are expanding again, rather than merely consolidating,” it added.
Still, with new projects being completed, Hong Kong’s office vacancy may hit 19 per cent by the year’s end, Colliers said. BLOOMBERG
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