For newcomers to the business world, expanding SMEs, or independent professionals in search of flexibility, choosing a business centre or coworking space is often a key step in their entrepreneurial journey. While most people focus on rental costs, utilities—an often overlooked “hidden expense”—can easily catch entrepreneurs off guard.
In the early stages of entrepreneurship, accurate cost control is essential. Although most business centres provide flexible “plug-and-play” workspace solutions, their methods for calculating utilities vary significantly. Some include utilities in the rent, others charge based on actual usage, and some impose additional fees determined by the management company.
These differences may seem minor, but as a company grows—along with increased usage and headcount—utility costs can escalate quickly. Understanding how utilities are calculated not only helps control expenses but also supports accurate financial planning and operational stability.
Electricity in Hong Kong is mainly supplied by CLP Power and HK Electric. CLP covers Kowloon, the New Territories, Lantau, Cheung Chau, and most outlying islands, while HK Electric serves Hong Kong Island, Ap Lei Chau, and Lamma Island.
Both companies adopt a tiered pricing system, meaning that unit rates increase as consumption rises. Electricity bills include not only basic charges but also fuel cost adjustments (linked to international energy prices), tiered consumption charges, and occasional rebates (e.g., high load-factor discounts).
Water charges, however, are collected solely by the Water Supplies Department. Water fees are calculated using a progressive block tariff: the first 12 cubic meters are free, after which different rates apply to each consumption tier. A sewage charge is also added, and commercial users may receive concessions depending on usage conditions.
Utility charges in Hong Kong business centres are usually based on actual usage and may be included in the rent or billed separately. The two most common models are:
1. All-inclusive Rent (Utilities Included)
This model bundles water and electricity into the monthly rental fee. It is common in business centres and well-suited for new startups, solo operators, and budget-conscious teams.
However, these “all-inclusive” plans often come with hidden caps, such as:
— A fixed allowance of electricity usage
— Additional charges for exceeding the limit
— Separate fees for printing, meeting rooms, or other services
Before signing, tenants should carefully review the contract to confirm what the rent covers and how additional fees are calculated.
2. Utilities Charged Separately
Business centres that charge utilities separately generally follow Hong Kong’s standard utility rates, but the method of billing varies:
(a) Direct Billing by CLP/HK Electric/Water Supplies Department
If individual submeters are installed, tenants receive utility bills directly from the suppliers. This approach offers transparency, though electricity costs may still fluctuate due to fuel cost adjustments linked to global energy prices.
(b) Billing via Property Management
If no submeter is installed, utilities for the entire floor or building are calculated collectively and then apportioned by the property management company. In some cases, management may combine additional costs into the utility fee, such as:
— Central air-conditioning system costs
— Electricity for common areas
— Security system power consumption
— Meter rental and maintenance
— Administrative charges
Entrepreneurs should request a detailed breakdown of the utility charge structure and list it clearly in the contract.
Key Questions for Assessing Whether Utility Fees Are Reasonable
Regardless of the billing model, entrepreneurs should consider the following:
1. Are utilities truly included in the rent? If so, what is the usage cap?
2. Do not accept vague answers such as “included”—request specific limits and excess usage rates.
3. Are charges based on an independent submeter?
If yes, fees reflect the supplier’s bill and are typically fair.
If no, ask about the management’s calculation method, such as apportionment by floor area or whether air-conditioning costs are included. Request a transparent formula.
4. Are additional maintenance or cleaning fees embedded in the utility charges?
5. Will high-power equipment (e.g., servers) incur special charges?
Some centres impose extra fees for heavy electricity usage, such as dedicated cooling, system maintenance, or server-specific electricity.
Beyond understanding the calculation methods, practical usage strategies can also reduce costs:
1. For small teams (2–6 people) with moderate to low consumption, choose an all-inclusive rental plan.
2. In Hong Kong’s high-air-conditioning environment, using fans to support cooling can significantly cut electricity usage.
3. Opt for energy-efficient equipment such as LED lighting and low-power monitors; these can reduce electricity consumption by 10–20% over time.
4. Some centres charge air-conditioning fees based on area, even if usage is minimal. Clarify the cost allocation method before signing.
5. High-consumption businesses (design studios, engineering teams, IT/server-intensive operations) are generally better off choosing submeter-based billing for greater transparency and long-term savings.
Starting a business in Hong Kong is challenging, and success often hinges on meticulous attention to operational details. Utility charges—though seemingly minor—impact daily operations and financial planning. By fully understanding and proactively managing these costs, entrepreneurs can strengthen their operational foundation and progress steadily on their business journey.