Colliers International, a global player in commercial real estate services, recently released its latest research report 'Top Locations in Asia: Finance'. The report, based on a comprehensive study of 16 cities in developed and emerging markets across Asia, examines nearly 60 criteria across a spectrum of socio-economic, property and human factors to determine the best locations in Asia for finance sector occupiers.

Andrew Haskins, Colliers' Asia head of research, comments: "Based on quantitative and qualitative analysis of socio-economic, property and human factors, Colliers believes the three top locations in Asia for financial occupiers are Hong Kong, Tokyo and Singapore. At #4, Shanghai is benefiting the most among Chinese cities from the country's financial liberalization, while Seoul at #5 is a wild card finance location with strong scores."

Ms. Tricia Song (宋明蔚), head of research for Singapore at Colliers International, says, "Singapore, a global financial centre 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. 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."

Top locations for finance firms

Hong Kong (Score: 61%; Position: #1) scores 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 and position in cross-border banking. Under property factors, high wages and rents push up employer costs, but total office stock is high and there is a wide gap in rents between the CBD and other areas. Hong Kong is #2 in Asia on human factors, due partly to a low tax rate and high quality of living.

Tokyo (Score: 60%; Position: #2) comes in second place since it scores highest overall on socio-economic factors, reflecting its huge size, high wealth and stability as a global financial hub. The city's high socio-economic score is partly offset by its low property score -- reflecting high staff costs, rents and a conservative office facility offering. However, Tokyo scores well on human factors, due largely to its high quality of living, safety, climate and lack of pollution.

Singapore (Score: 55%; Position: #3) scores very highly on socio-economic factors, especially employment criteria, due to high political stability, the ease of doing business, high-quality infrastructure and strong regulatory governance. It lacks the banking scale of Tokyo or Hong Kong but is a key wealth management centre. Singapore only has a modest score on property factors, due largely to its limited stock of prime grade office space. However, Singapore comes top on human factors such as personal tax, safety, living quality, climate and pollution, and the high-tech city metric included in our scoring.

Alternative finance location

Shanghai (Score: 54%; Position: #4) is China's financial capital. It scores well on measures of economic scale and wealth, with GDP/capita 139% of the national average and an equity market value of about USD4.2 trillion. Shanghai also scores highly on property factors, notably on quality of office stock, and on intra-city connectivity. It has two key financial zones (Lujiazui and the Bund) and is benefiting the most among Chinese cities from the country's financial liberalisation.

Wild card location

Seoul (Score: 53.5%; Position: #5) scores favourably on measures of economic scale and wealth, as well as employment considerations such as political stability, ease of doing business and city infrastructure. While Seoul's ranking on property factors is modest, it scores highly on human factors such as safety, environment and the high-tech city metric.

Singapore: Third best location in Asia for financial services firms

According to Colliers' study, Singapore's top score on human factors (15.7%) and relatively strong position on socio-economic factors (28.4%) have helped to mitigate its weaker performance on the property metric (10.7%), which was weighed down by the limited availability of prime grade office stock at 24.3 million square feet – one-third the level of Hong Kong and only about 13% that of Tokyo.

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.