Hong Kong residential rents still stuck in a downward streak

Townhouse rents saw the most significant decline of 5.8% in Q4.

According to a Savills report, the Hong Kong residential market has seen very little change in activity levels since the third quarter of 2022, but landlords have been showing greater flexibility in negotiations towards year-end as many are keen to lease vacant units before the traditionally quiet run up to the Chinese New Year in late January. 

“The government’s latest ‘0 + 0’ policy has had only a very minor impact on volumes, but we see falling sales prices beginning to push people into the rental market. Luxury rents on Hong Kong Island and New Territories recorded a decline of 3.1% and 1.1% respectively, while rents in Kowloon rose slightly by 0.1%,” the report said.

Here’s more from Savills:

Luxury rents on Hong Kong Island all recorded declines in Q4/2022, with Mid-Levels (-3.4%), Pokfulam (-3.8%), The Peak (-2.4%), Happy Valley/Jardine’s Lookout (-2.5%), Southside (-2.4%) all posting modest falls.

Some districts have seen much steeper rental falls than others and Pokfulam in particular has been losing out to Mid-Levels West where transport options are much better. 

Cemetery views also tend to put off Indians, locals and Mainlanders. Even Residence BelAir, beyond the cemetery, is seeing high levels of vacancy right now and multiple landlords are competing for tenants. Residence Bel-Air comprises around 3,000 units in six phases launched from 2003. 

In Kowloon, luxury rents remained relatively stable, with Tsim Sha Tsui/Hung Hom (+0.1%) and Ho Man Tin/Kowloon Tong (+0.2%) posting small rises, while in the New Territories, luxury apartment rents recorded marginal declines over the quarter, in particular Discovery Bay (-2.4%) and Sai Kung (-0.1%), with the exception of Sha Tin/Tai Po (+0.6%). 

Discovery Bay continues to face challenges on several fronts as demand from airline staff remains weak in terms of both numbers and budgets. The ferry service is also regarded as inconvenient and expensive while new areas including Tung Chung and Tseung Kwan O present viable alternatives to the enclave. 

The Sai Kung and Clearwater Bay markets are also quiet at the moment with fewer expats in town. The Kowloon market remains quite stable with areas such as Tsim Sha Tsui and Hung Hom popular among arriving Japanese expats. 

Townhouse rents fell heavily by 5.8% over the quarter, with a 6.2% decline on the Peak and a 5.5% decline recorded in Southside. Landlords have been willing to reduce rents in order to lease their townhouses before the end of year.