(Bloomberg) -- Singapore office rents may overtake those of Hong Kong for the first time since 2009, a sign that the Southeast Asian city-state is gaining an edge over its rival financial hub.

Average office spot rents in Singapore could rise 5% to 10% in 2022 on the back of a limited new supply, according to a Bloomberg Intelligence report. Hong Kong’s prime office vacancy rate may exceed 12% by the end of next year following a supply boom in decentralized districts, analysts Patrick Wong and Kristy Hung wrote.

Rents Converge

The contrasting office market outlook reflects the impact of different pandemic management strategies adopted by the cities. While Singapore is cautiously reopening and work from home remains the default arrangement, it has stopped targeting zero Covid-19 cases and begun easing border controls. Hong Kong remains closed off to the rest of the world and has strict quarantine rules due to its elimination strategy, which has garnered criticism from global companies. 

Read how global firms are paying for Hong Kong quarantine bills

Singapore’s office market is also benefiting from the “stay-at-home” sectors given the shift in tenant profile in recent years from financial services to technology, said Christine Li, head of research for Asia Pacific at Knight Frank in Singapore. Hong Kong has been less competitive in attracting new tenants due to its perceived high costs, she said. 

“With the Covid-zero approach on Hong Kong’s part, multinational companies might continue to find challenges in hiring cross-border talent to its shores,” Li said. “That could have weakened the potential recovery trajectory in the occupier market.” 

©2021 Bloomberg L.P.