Swiss investment bank UBS faces a 10-fold rent increase as the lease on its local premises is close to expiring.
The firms took a 10-year lease on space in Two IFC in Central, when SARS was ravaging Hong Kong. It signed with MTR Corp (0066) in November 2003 to rent 146,070 square feet across six floors at HK$4.7 million per month. That works out to HK$32 per square foot.
UBS has limited options, property sources said.
"They're paying HK$3 million a month, and that could go up to HK$30 million," one broker said. Over a year, that monthly rise could cost UBS an extra HK$324 million.
UBS is in the midst of a major, global cost-cutting program, so the prospect of a big rent hike is bad timing. UBS and MTR declined to comment. REUTERS