Over 90 percent of housing estates in Hong Kong delivered rental yields above mortgage rates in May, as the city’s interbank rates fell and rental returns reached their highest level in more than a decade, according to data from Centaline Property Agency.
Centaline tracked 143 housing estates in May, of which 133 posted rental yields exceeding the H-plan mortgage rate of 2.77 percent. Among them, 29 estates offered yields of 4 percent or higher, up seven from April.
Smithfield Terrace in Kennedy Town topped the list with a rental yield of 5.41 percent, followed by Tak Bo Garden in Kowloon Bay at 5.04 percent, Nan Fung Sun Chuen in Quarry Bay at 4.96 percent, Mayfair Gardens in Tsing Yi at 4.57 percent, Wonderland Villas in Mei Foo at 4.57 percent, and Garden Rivera in Sha Tin at 4.54 percent.
Centa-City Rental Index showed rental yields rising to 3.54 percent in May, up 0.06 percentage points from the previous month, marking the highest level since December 2011.
Meanwhile, interbank rates plunged from nearly 4 percent to below 1 percent in May, driving the H-plan mortgage rate down to 2.77 percent, its lowest in nearly three years and below the 3.5 percent cap for the first time.
Despite a slight recent uptick in interbank borrowing costs, ample liquidity in the banking system has kept mortgage rates below the capped level, Centaline said. Rental yields are expected to remain above borrowing costs amid market expectations of a Federal Reserve interest rate cut in the third quarter, the agency added.
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