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Mainland Chinese companies have been moving into premium office areas in Hong Kong’s Central business district, taking over the prime locations left vacant by foreign groups in the wake of the pandemic.

ByteDance, the Chinese owner of social media platform TikTok and one of the country’s most valuable tech start-ups, is taking over about 16,000 sq ft of office space at One International Finance Centre this year from Switzerland-based bank Julius Baer, which is moving to a less central location, according to three people with knowledge of the deal.

An affiliate of state-owned China National Petroleum Corporation is set to move into a nearly 14,000 sq ft office in the Central business district, two sources said, after its previous tenant, flexible workspace provider Regus, owned by Switzerland-based IWG, closed its centre there.

Hong Kong experienced an exodus of foreign companies because of its zero-Covid pandemic control measures, with many moving people to rival Singapore. Prime office rents in Singapore rose nearly 6 per cent last year while Hong Kong’s dropped more than 6 per cent, data from real estate company Knight Frank showed. Hong Kong’s office market is reporting record high vacancy rates of about 17 per cent, according to property agency Cushman & Wakefield, with average rental prices at prime central offices dipping from HK$165 ($21) per sq ft in April 2019 to about HK$105 by March 2023.

Mainland Chinese companies took up roughly 29 per cent of new lettings in the Central district in the first quarter of this year, data from commercial real estate agency Colliers showed, compared with 21 and 23 per cent in the whole of 2022 and 2021, respectively.

Mainland companies find Hong Kong attractive as it is “still a global financial centre”, said Rosanna Tang, executive director and head of research in Hong Kong at Cushman & Wakefield. Banking, insurance and finance firms are among those from the mainland interested in new offices in the city, she added.

Many foreign companies have also been downsizing and moving staff away from the central business area to other areas as they cut costs and consolidate their offices, according to property agents.

Japanese bank MUFG and French lender BNP Paribas are among foreign companies planning to move staff away from the Central district to other areas in Hong Kong. FedEx, the US transport and delivery company, is moving staff and its Asia-Pacific headquarter functions to Singapore from Hong Kong. It will retain a Hong Kong office.

Multinational groups will probably continue to move out of the Central district to save costs, according to Ada Fung, CBRE Hong Kong’s head of office services, advisory and transaction. UBS is set to move its staff from Central to West Kowloon from 2026.

Industrial and Commercial Bank of China (ICBC), one of China’s biggest banks, is looking for a new office in Hong Kong for rental or purchase and has recently inspected two new flagship office buildings — Li Ka-shing’s Cheung Kong Centre II and Lee Shau-kee’s The Henderson — according to three people familiar with the matter.

United Energy, an oil and gas company controlled by Chinese tycoon Zhang Hongwei, is set to be the first tenant of Cheung Kong Centre II, said a source briefed on the matter.

ByteDance confirmed the move. Julius Baer, MUFG and BNP Paribas did not offer further comment on their moves. IWG, CNPC, ICBC and United Energy have no response.

This story has been amended to clarify that ByteDance is moving into One International Finance Centre (IFC). An earlier version implied it was moving into Two IFC, which is taller.