The wandering heart of Hong Kong

Steep, winding alleyways lined with trendy boutiques wrap themselves around a phalanx of towering skyscrapers. Swathes of light bounce off the modern glass facades. This, the Central District on Hong Kong Island, has been the heartbeat of the city since the colonial age – the political and economic core that tells of a tumultuous, war-ridden history, and the site of rapid commercial development that characterised the second half of the 20th century.

This home of global financial headquarters and government buildings, however, has begun to reach bursting point. Hong Kong has started to become a victim of the very compactness that helped the city’s reputation to soar into the stratosphere in the first place: while its small size once worked in its favour by allowing for efficient business, it now means that CBD growth has come to a near-halt, in turn driving rent prices sky-high.

While New York, London and other major metropolises have been growing ever bigger, Hong Kong’s business district has kept the same commercial space for 10 years – approximately 23 million sq ft, according to CBRE Group. And while the world’s other megacities have been erecting wider buildings to supersede the very high, narrow skyscrapers constructed in former times, this hasn’t been a possibility in Hong Kong: buyers in Central tend to own certain floors rather than entire blocks, and so, with such limited supply and redevelopment, it’s little wonder that Central has become one of the priciest commercial spots on the planet. The most expensive offices in the area now cost around four times what they used to.

Across the harbour
With all this in mind, it is perhaps unsurprising that Central-based businesses have started to set their sights elsewhere. Among the new, up-and-coming districts catching the spill-over is Kowloon, a peninsula across the waters of Hong Kong Island’s Victoria Harbour. It has already managed to lure in Deutsche Bank, Morgan Stanley and Credit Suisse; corporations formerly found in the traditional business district. However, as a patch of little more than reclaimed scrubland, Kowloon’s lack of ambiance has so far held others back.

But a multibillion-dollar new development is set to change that. Hailed as the largest project of its kind in Hong Kong’s history, the West Kowloon Cultural District is expected to revitalise the area and strengthen its appeal to businesses already struggling with the drawbacks of being positioned in Central. The $2.4bn development is also set to turn the currently bland region into a hub for art and culture.

Until recently, both of those areas had taken a backseat in Hong Kong due to the severely limited space on the island – the citywide consensus was that, if there wasn’t sufficient space for commerce, there certainly wasn’t enough for culture venues. But as businesses and developers have been forced to make creative use of space both within and beyond the city’s original core, arts, culture and heritage sites have started to crop up. They have since begun to thrive alongside commerce, and the city has unexpectedly seen two previously unaffiliated worlds beginning to intertwine.

CBDs of the future
Located north of Hong Kong Island and south of the New Territories, the Kowloon peninsula started to develop as an alternative commercial spot in the 20th century. The arrival of new infrastructure – including the Kai Tak Airport, which served as Hong Kong’s international flight hub until 1998 – significantly increased the region’s standing, but it wasn’t until fairly recently that the district started to take off properly. In 2001, the eastern side benefited from considerable changes that saw the area – an abandoned former industrial base – rezoned for business use. The new ruling paved the way for commercial developments, and in 2010 a citywide redevelopment programme helped to realise those opportunities. As a result, Kowloon is now predicted to become Hong Kong’s CBD2, according to CBRE.

Top-tier commercial space in Kowloon East has doubled in the space of seven years, with the area’s affordability drawing in the back-end offices of banks, SMEs and creative industries. Rent averages at HKD 30 per square foot per month, compared with HKD 100 in Central, so – as the EKEO, an organisation promoting developments in the neighbourhood, points out – it is little wonder the area is now home to nearly 30,000 companies. Citibank is one of several companies to have recently bought a block in Kowloon East, which will house its regional headquarters. Around 2.5 million sq ft of additional office space is planned for construction in the region by 2018.

But it’s to the west of the Kowloon peninsula that the biggest changes are being seen. Home to the International Commerce Centre (ICC) – a 118-story skyscraper, completed in 2010 – West Kowloon is also seeing a surge in businesses relocating from the main island. The ICC, now Hong Kong’s tallest building, forms an inviting alternative to the sardine-like structures that fill the hilly streets of Central, and it’s to the area surrounding this glass giant that firms such as Deutsche Bank have flocked. With draws including the world’s highest bar, the Ritz-Carlton Hotel and Michelin-starred eateries within the ICC’s walls, that’s perhaps no surprise.

Five housing developments have now sprung up in West Kowloon, which are proving especially popular with investors from mainland China, according to Simon Smith, Head of Research at Savills: “[Mainlanders have] been significant buyers in some of these buildings, and they’ve not been put off by the prices”, he told the Financial Times. And though more expensive than Kowloon East, the prices are still relatively wallet-friendly compared with Central. A three-bed flat in The Arch or The Cullinan, two of West Kowloon’s new housing areas, cost around HKD 30m ($3.87m), according to the CBRE – the equivalent at The Peak, a prime spot overlooking the harbour in Hong Kong’s Central district, would cost up to HKD 90m ($11.61m).

But according to Jonas Kan, a property analyst at Daiwa Capital Markets, an even bigger driver for the shift to Kowloon has been a change in mentality. The area has seen a decline in the snobbery that once held up the original business district as a beacon for big firms to aspire to – the symbol of having ‘made it’. “There used to be a psychological barrier, when everything used to be about Central”, he told the Wall Street Journal. “The barrier has been broken.”

Increasingly connected
That barrier is likely to be further destroyed as a number of key developments get underway, gradually overcoming the issues still holding some back from relocating to Kowloon – first and foremost, a lack of connectivity and a glaringly apparent shortage of green, open space. The first of those is being addressed with rail links scheduled to open over the next few years, which could substantially reduce the current 30-minute trip from Kowloon East to Central. West Kowloon, meanwhile, has been chosen as the terminus for a new express railway that will halve the current journey time to Guangzhou on the mainland. The new 25-acre train station, which is costing a massive $8.5bn and has been under construction since 2011, is being hailed as the biggest underground high-speed station in the world.

The station’s striking contemporary design is likely to further revitalise the West peninsula while helping to distinguish the building from the more traditional, sky-scraping architecture of Central. It’s also set to drive major job creation in the area, alongside growth in tourism, retail and other sectors. An estimated 99,000 passengers are expected to walk through its doors each day by 2016 – an unprecedented influx of people that will be drawn to the Kowloon district. By improving connectivity, it’s likely to further establish the region as a viable choice for businesses, while also boosting its reputation on the mainland.

The high-speed rail station will further drive the potential shift away from Central and into Kowloon, by connecting underground to the West Kowloon Cultural District (WKCD) and leading directly onto Hong Kong’s new cultural hub. The HKD 21.6bn ($2.8bn) project is set to create green space and a vibrant ambiance in an area that is currently extremely short on both. West Kowloon lacks the alluring concoction of traditional Hong Kong culture and high-end business that characterises Central – so far it’s focused largely on the latter, but at the expense of authenticity, with private pools, luxury hotels and a growing number of designer stores creating a sense of man-made, purpose-built artifice while the ‘real’ Hong Kong gets left behind.

Hub for culture
Through the means of arts and heritage, however, the 40-hectare WKCD – funded by the Hong Kong Special Administrative Region (HKSAR) government – is likely to change that. Its latest development plans are expected to further strengthen West Kowloon’s appeal to businesses, while simultaneously making way for cultural space that’s always been so lacking in the city. These plans, designed by famed contemporary architects Foster + Partners, will see a 2km harbour-front promenade, park and 17 arts venues spring up. First proposed 15 years ago, the project is now finally under construction, with venues opening gradually over the next few years.

Michael Lynch, Chief Executive of the WKCD Authority (and former chief executive of both London’s Southbank Centre and the Sydney Opera House) hopes that the proposals will inspire creativity and artistic expression in the city. He says, “Our vision is to provide a new cultural quarter for Hong Kong – encompassing a collection of world-class venues for the visual and performing arts… spilling beyond the buildings and out into the open spaces.”

The park will present outdoor exhibitions, performances, pop-up shops and eateries in the run- up to the opening, forming what organisers are calling a “test-bed for creative programming”. Within it, attractions such as the Arts Pavilion (opening in 2016) and the Freespace outdoor stage (set to be launched in 2017) will sit beside hotel, office and residential developments. West Kowloon will also see the opening of the Xiqu centre – a space for traditional Cantonese theatre and the area’s first major venue – in 2017. Contemporary art museum M+ will follow in 2018. At 62,000sq m., M+ is set to be on a similar scale to New York’s Museum of Modern Art, and has already amassed a collection of 4,000 works.

All of this is expected to have far-reaching effects, according to Lynch: “We hope we can create a place that people can be proud of; a new landmark that has an impact throughout Hong Kong, into Asia and beyond.” And as Kowloon places itself at the heart of Hong Kong’s wider cultural scene, so the decentralisation of Hong Kong Island in preference for the peninsula will become increasingly likely.

Growing arts scene
The cultural scene has been developing rapidly over recent years, as Pearl Lam, director of several renowned art galleries in Hong Kong, Shanghai and Singapore, recognises. “The cultural scene is booming across the whole city”, she told Business Destinations. “I have watched the city gradually transform into a contemporary art hub attracting both an international and local audience to experience Asian art.” Lam opened her Hong Kong gallery in 2012, but just seven years previously she had left the area due to lack of local interest.

While Hong Kong’s status as a free port, combined with its lack of sales tax on art, has long held the city out to art dealers, it’s only recently that it has caught the attention of a wider audience. Hong Kong now has the third biggest share of the global art market, its reputation being cemented further by the number of new galleries cropping up across the city. In revitalising West Kowloon and drawing in businesses that are seeking more than a bland office block, WKCD is becoming part of a wider trend in Hong Kong – commerce and creativity are co-joining in a way that they never have before, seeing old spaces being utilised and re-imagined.

Fuelling gentrification
This re-imagining of space isn’t unique to Kowloon – it’s also happening in Central itself. More than 15 listed, disused buildings in the downtown business district have recently been revived and turned into new cultural venues. In April, the grade-three listed Police Married Quarters, located in Central and left neglected for years, opened as PMQ; a creative hub that will nurture local designers. As in West Kowloon, Hong Kong Island is gradually weaving heritage and culture into its commercial streets – as such, art is becoming a way of making use of otherwise wasted space in an environment where it is scarce.

This is something that is also being seen elsewhere. In the Wan Chai district – now a busy commercial area attracting SMEs and exhibition centres – a former school has been creatively re-imagined and turned into The Principal, a Michelin-starred food hub. Derelict buildings across Hong Kong have been revived into art galleries, again driven by a need to make use of desperately limited space. As that happens, and as the need to find alternative space becomes ever more apparent, the city is seeing rapid gentrification of previously dilapidated areas. Kennedy Town on Hong Kong Island, once the province of Chinese workers tending to slaughterhouses and warehouses, has started to see the rise of luxury apartments, chic French bistros and an influx of expats. Neglected residential sites in neighbourhoods such as Sham Shui Po are also set to be redeveloped, and rough-around-the-edges areas are becoming the go-to alternatives for businesspeople that the more traditionally upmarket Central simply cannot accommodate.

Making use of those areas is essential in a city famed for being so compact. Bernard Chan, member of the Executive Council, recognised this: “Our population and physical area are likely to grow along with the economy”, he wrote in an article for South China Morning Post. “Our definition of ‘downtown’ will expand, and something will have to give.” As such, West Kowloon – where a Balenciaga now sits beside a recently closed-down bookstore – is a perfect emblem of the wider changes happening in Hong Kong. As traditional districts on the island begin to overflow, businesses will inevitably spill into new regions, and with that increased space comes greater scope for creativity, arts and heritage sites that grow in perfect congruency with the city’s commerce.

As this decentralisation happens, the packed-together structure of Hong Kong that made flitting from meeting to meeting so easy is slowly being eroded. But that’s a sacrifice that the city must make if it is to sustain its reputation as a global centre of business and move into the 21st century, in line with other major cities.

It’s also a sacrifice that’s bringing with it new opportunities. As Hong Kong grows into a hub for culture as well as commerce, fine art as well as finance, it seems natural that its heart should shift to the peninsula where that new cultural scene has its core – and that Hong Kong Island, which has held sway for more than a century, should give way to new CBDs where growth and diversification can finally prevail.