Rents drop amid supply boost as many owners opt to lease

Bloomberg and Kevin Xu

Apartment rents in Hong Kong have dropped to their lowest in almost two years as people leave the city and homeowners opt to lease rather than sell.

Data from property agency Spacious showed that advertised residential prices on a per-square-foot basis were at their lowest since March 2018.

Rents have been under pressure since the social unrest started in June, with Covid-19 fears now also hurting demand.

"People with partners or spouses who aren't working, or children who aren't at school, they're relocating now for the time being," said Letizia Garcia Casalino, Colliers International's head of residential services.

In several cases, landlords offered tenants discounts as steep as 12 percent off from current levels, she said.

The virus outbreak is also affecting secondary-market sentiment.

Several transactions have been reported with homeowners selling at a loss, despite recent data from Centaline showing that home prices have inched up 1 percent between January 19 and February 9.

An apartment in Yuen Long sold for 13 percent - or HK$1.2 million - less than its original listing price, reports said.

Other homeowners who are reluctant to cut their asking prices have resorted to leasing their properties, said Matthew Hung, deputy regional sales manager at Centaline Property Agency.

"This has increased supply and added to pressure on rents."

Hung added: "Some sellers don't want to let go of their property at a cheap price.

"They expect the disease will end soon and therefore they'd rather rent their apartments out in the meantime."

Hung estimated the supply of apartments for rent in the northern New Territories area that he covers has increased around 10 percent from last month.

In the secondary market, a mainlander left Hong Kong after selling his 531-square-foot flat at La Rossa in Tung Chung for HK$6.5 million, or HK$12,241 per sq ft, after cutting HK$1 million from the initial asking price, according to Centaline Property Agency.

Fighting the trend is Japanese retail store chain Don Don Donki, which plans to open its fourth branch in Tseung Kwan O, with a rent of about HK$20 per sq ft per month.

It has been reported that vacant shops have been seen in Harbour City shopping center, one of the territory's most popular shopping destinations for mainland tourists.

kevin.xu@singtaonewscorp.com