Hong Kong employees say they would need at least a 6% pay rise to return to working fully in the office, according to a new survey. This poses a dilemma for companies that may now opt to reduce office space and adopt hybrid working arrangements instead.

The survey of 350 Hong Kong workers by Bloomberg Intelligence found over half would ask for a raise or switch jobs to maintain flexible arrangements if required to be in the office 5 days a week.

Analysts say companies adopting hybrid work could cut office space, leading to a 6% or more drop in rents in 2024 - on top of similar declines in recent years. Office vacancies in Hong Kong hit a record high of 16.4% last year.

Mainland Chinese firms, previously major drivers of office demand, accounted for just 11% of new leases in 2023 - down from 18% in 2021. This weak demand worsens the outlook.

In the survey, 27% of respondents said they would ask for a pay rise to give up hybrid work, with most demanding 6% or more. Another 24% would change jobs to secure flexibility.

Faced with strong worker demands for hybrid arrangements, companies may have little choice but to adopt such policies, even if it means reducing costly office footprints. This could put further downward pressure on Hong Kong's weak office rental market.