Hedge Fund Dymon Expands Hong Kong Office, Bucking Trend

Hedge fund firm Dymon Asia Capital is expanding its presence in Hong Kong’s central business district, despite the city facing an increase in office vacancies and falling rental rates. Dymon has secured a lease for a 7,000 square-foot office in the Edinburgh Tower, located within the Landmark commercial complex owned by Hongkong Land Holdings Ltd. This new space will be able to accommodate over 70 employees, double the capacity of its current office in the Nexxus Building. The vacancy rate for grade-A offices in Hong Kong reached a record high of 16.7% at the end of March, and rental rates have declined for the 20th consecutive quarter. According to a report by CBRE Group Inc., the combination of new office supply and cost-cutting measures may result in more vacant premium office space and continued pressure on rental rates.
According to Kan, Dymon has been occupying the Nexxus Building office since 2016 and currently has over 30 employees in Hong Kong. The multi-strategy hedge fund, valued at $2.5 billion, has achieved an estimated 10% return in the first five months of this year.

Kan also mentioned that out of the approximately 15 portfolio managers hired since the beginning of 2023, 40% have chosen to work in Hong Kong, despite being given the option to work in other locations such as Singapore, Tokyo, Mumbai, and Shanghai.

Due to the increasing number of talented individuals opting to work in Hong Kong, Dymon found it necessary to search for a larger office space earlier this year. Kan emphasized that Hong Kong remains a crucial market for Dymon Asia and that they will continue to expand their team in the city.

As a result of this news, shares of Hongkong Land, the largest commercial property landlord in Central, experienced a significant increase of up to 3.6% in Singapore trading on Tuesday, marking the largest intraday gain in two weeks.
Hong Kong is facing challenges in attracting talent and firms back to the city. The strict Covid-era restrictions, geopolitical concerns, and China’s economic slowdown have caused many to leave. Despite government efforts, the economic realities have made it difficult to achieve this goal.

The lack of investment banking deals has led to international financial firms reducing their office space. In the first quarter, Hong Kong had the lowest proceeds from initial public offerings since 2009. For example, Bank of America Corp. had to cut down on office space in Cheung Kong Center and relocate some staff to a more cost-effective location.

Furthermore, mainland Chinese companies, which were once the city’s primary tenants for premium offices, are not rushing to lease spaces either. Data from CBRE shows that they only accounted for 8% of new leases in the first quarter.
Hong Kong has been the leading hub for hedge funds in the region when it comes to asset management. According to Eurekahedge Pte gauge, China-focused hedge funds have only managed to generate an average return of 1.1% this year, still far from recovering their losses since 2021.

Dymon is set to relocate to its new office in the early fourth quarter. However, Kan, the spokesperson for the company, refused to provide details regarding the lease duration and rental rates due to a confidentiality agreement.