Survey shows Hong Kong tops global setup costs for businesses

SME bosses planning to operate in Hong Kong are in for a shock, as the city is now the most expensive on the planet for business set-up costs.

Many expats in Hong Kong are there simply for the business opportunities, with many more SME company directors looking to expand or relocate to the city to take advantage of the boom in China. However, according to Savills’ World City Review, setting up premises in Hong Kong now costs more than in any other world city.

In spite of recent attempts by the Hong Kong government to cool down the overheated real estate market, the city now tops a list of world business destinations including Tokyo, London and New York. The survey’s benchmark was a single small executive unit such as an ad agency or hedge fund, with overall costs based on a six-person staff, an expat CEO and senior director.

On average, the real estate-related costs of renting office space and housing expat staff accounts to over £1 million a year, three times more than in cities such as Shanghai and Mumbai. Investors are taking into account the yields on properties here, pushing the prices even higher.

According to the author of the survey, Yolande Barnes, New York is looking like good value as regards rental income for investors. Residential prices have failed to see expected growth, with the alpha world city now rated as a comparatively inexpensive ‘olde worlde’ urban centre.

Sydney is considered as a city to watch, given its position close by Southeast Asia, one of the planet’s fastest growing regions as per economy. Of course, Sydney is also one of the favourite destinations worldwide for expats.