Local tenants have taken advantage of reduced rents to upgrade to better quality projects
According to South China Morning Post, Hong Kong’s high-end home rentals sector heaves a sigh of relief as local demand has progressively filled up the vacant flats left behind by expatriates.
In the last two years, luxury home rents fell by 16 percent, and local tenants have taken advantage of the decline to upgrade to better quality projects.
Derek Sun, managing director of Sun Hung Kai Properties Signature Homes unit, said, “The market started to get warmer in the second quarter this year, and rent became stabilised in the summer.”
“The worst is behind us, and we are more optimistic about the rental market in 2022,” he said.
According to JLL’s Hong Kong Residential Sales Market Monitor, luxury residential rents saw an increase of 1.4 percent between April and June, the first quarterly rise since Q3 2019.
The highest rental growth of two percent was seen at mid-levels, largely due to limited availability.
JLL added that the market was mainly supported by the current pool of residents in Hong Kong, which compensated for the significant drop in expatriate arrivals.
Norry Lee, senior director of the projects strategy and consultancy department at JLL in Hong Kong, said, “With the ongoing travel restrictions, expatriate arrivals are expected to remain limited in the short term. However, we still expect to see more leasing enquiries in the third quarter of 2022 as summer is the traditional home search season.”
“With the expectation of borders reopening before the year-end, the luxury leasing market is anticipated to improve gradually,” she added.
In early 2021, landlords and serviced apartment operators marked down their rents and offered promotions to boost occupancy rates that had been heavily impacted by travel restrictions and a sharp decline in relocations due to COVID-19.
“Some of our clients from overseas have postponed their reservation [with us] during the pandemic,” said Sun of Signature Homes.
At the peak of COVID-19 last winter, rents were slashed by around 10 percent for leases upon renewal, as expatriates were kept away from Hong Kong as a result of border closures.
Sun said occupancy rates have rebounded to 80 to 90 percent via local marketing push and the refurbishment of existing properties.
“The market is receptive to newly renovated properties at a high rent,” he added.
The Property Report editors wrote this article. For more information, email: [email protected].
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