HONG Kong, Tokyo and Singapore are choice destinations in the region for finance companies to be based, a study said, with the financial services sector expected to continue to play a key role in growth for the region.
The report by Colliers International is based on a comprehensive study of 16 cities in developed and emerging markets across Asia, looking at nearly 60 criteria covering areas such as socio-economic factors and property.
With a score of 61 per cent, Hong Kong emerged top in the region, scoring highly on socio-economic factors, including employment criteria such as political stability, ease of doing business and regulatory governance, and wealth factors such as stock market value, city inward FDI (foreign direct investment) and position in cross-border banking. Under property factors, high wages and rents elevate employer costs, but total office stock is high, "with a wide gap in rents between the CBD (central business district) and other areas".
Singapore was in No 3 position, behind Tokyo. The Republic remains an attractive regional base for many financial institutions owing to its stable political and economic environment, pro-business policies, active capital market and robust regulatory framework, noted Tricia Song, head of research for Singapore at Colliers International.
She added: "The financial services sector continues to play an important role in the growth of Singapore and the region, be it in corporate finance, trade facilitation or infrastructure financing. We believe the outlook for the sector in Asia remains bright, driven by rapid urbanisation and a growing middle class."
With a score of 55 per cent, Singapore scored high on socio-economic factors, especially employment criteria, due to high political stability, the ease of doing business, high-quality infrastructure and strong regulatory governance. However, it lacks the banking scale of Tokyo or Hong Kong, although it is a key wealth management centre, the report highlighted.
Singapore had just a modest score on property factors, due largely to its limited stock of prime-grade office space at 24.3 million square feet - one-third that of Hong Kong and 13 per cent that of Tokyo's. It came out top in human factors such as personal tax, safety, living quality, climate and pollution.
The report said: "Looking ahead, the growth of fintech should have an impact on the office property market performance in Singapore, potentially allowing the financial services and banking sector to reduce the demand for traditional office space, shifting to more flexible workspaces."
In fourth place was Shanghai, which scored on scale and wealth metrics. Seoul rounded off the top five.