For startups, small and medium-sized enterprises (SMEs), and even individual entrepreneurs, renting office space in Hong Kong is no easy task. There are numerous details to consider, and a single misstep could lead to leasing pitfalls, financial strain, or even violations of legal regulations. So, what should you pay attention to when renting an office?
▌Understanding Office Usage: Choose the Right “Battlefield” Wisely
In Hong Kong, there are various types of office spaces available for rent, including commercial buildings, industrial buildings, serviced offices, and virtual offices. Each type has its unique advantages, so the choice should align with business needs and legal restrictions:
Commercial Buildings
Typically located in core business districts with excellent amenities and convenient transportation, commercial buildings are the preferred choice for professional service industries (e.g., finance, law) and large corporations. However, rents in these buildings are often high, and additional costs like management fees and government rates can make them unaffordable for many SMEs.
Industrial Buildings
Rents in industrial buildings are usually 30%-50% lower than in commercial buildings, making them a popular option for SMEs and tech startups. However, their original use is restricted by land leases, primarily designated for industrial or warehouse purposes. If repurposing the space for “non-industrial” uses (e.g., offices), tenants must ensure the landlord has obtained a short-term waiver from the Lands Department to avoid legal violations.
Update: Since February 1, 2019, the Development Bureau has relaxed the application requirements for waivers on industrial building use, extending the policy until 2027. Under this waiver, individual unit owners can convert their spaces for the following five specific non-industrial uses without applying for a waiver or paying fees:
Art studios
Offices (audio-visual recording studios)
Offices (design and media production)
Offices (limited to “specific creative industries,” including design/media production, printing/publishing, film companies, and related organizations)
Research institutes, design, and development centers
Serviced offices are like hotel-style workspaces, offering fully furnished areas and administrative support services (e.g., reception, cleaning, IT). They’re ideal for businesses needing quick setup.
Virtual offices provide services like a registered business address, mail handling, and call forwarding without physical space. Perfect for remote teams or startups, they offer a professional presence without the cost of a physical lease.
▌Handover Inspection: Protecting Your Rights
When leasing an office, pay close attention to details to avoid future disputes or significant losses. For example:
Inspect walls, floors, and ceilings for cracks, leaks, or hollow spots, and document them with photos.
Test air conditioning, lighting, and power outlets to ensure they function properly, and verify their brands/models against the contract.
Additionally, the lease should clearly describe the condition of the property’s fixtures and include photo/video evidence to clarify legal responsibilities. This prevents disputes during handover, ensuring a smooth process for both parties.
▌Business Insurance: Core Protection for Your Company
From the first day of the rent-free period, property liability shifts to the tenant, so insurance coverage should begin immediately. Understanding and purchasing relevant business insurance can protect your company from financial losses and legal liabilities due to accidents. Typically, SME business insurance covers three main areas:
Property Coverage
Protects against losses from fire, floods, typhoons, theft, etc., covering renovations, furniture, equipment, documents, and inventory.
Third-Party Liability Coverage
Covers legal liabilities if your business activities cause harm to others (e.g., a falling store sign injuring a passerby or a slip-and-fall accident on your premises).
Employees’ Compensation Coverage
Under Hong Kong law, all employers must purchase workers’ compensation insurance to cover statutory liabilities. Employers cannot hire staff (full-time, part-time, or temporary) without this coverage. Violators face fines up to HK$100,000 and up to two years’ imprisonment.
▌Rent-Free Periods and Costs: Key Leasing Details
A rent-free period is granted by landlords for tenant renovations, but hidden costs and responsibilities must be noted. Typically, the rent-free period is specified in the lease, ranging from 2–3 months (negotiable with the landlord).
Important: From the first day of the rent-free period, property liability transfers to the tenant, so business insurance must be activated. Additionally, tenants may still need to pay management fees and government rates during this period.
