Rents in high-end properties fall on expat exits, high jobless rate

Top News | Bloomberg and Winnie Lee 6 May 2021

Rents in high-end properties in districts favored by Western expats and wealthy mainlanders - including Mid-Levels and Deep Water Bay - plunged as much as 25 percent from mid-2019, according to a rental website.

Soho in the Sheung Wan district, popular among foreign students and young professionals, also saw rents drop by 20 percent in the same period.

A two-bedroom flat in Soho now goes for about HK$27,300 a month, down from over HK$32,000 two years ago, according to

Rents in one of the world's most expensive real estate markets fell to HK$33.60 per square foot in the first quarter, the lowest since the end of 2016, data from Centaline Property Agency showed.

An exodus of expatriates following anti-government protests, combined with a declining population and a higher unemployment rate, have led to sluggish rental demand.

The economic uncertainties and mobility difficulties that emerged during the 2019 pro-democracy protests drove the decline, said James Fisher, chief operating officer at Spacious. The pandemic and the deep recession added to the weak demand.

Derek Chan, head of research at Ricacorp Properties, explained that some foreign companies rented large-scale flats for senior management, but demand fell due to the Covid-19 lockdown.

Rents in other financial hubs have also fallen during the pandemic. New York's rental values have dropped 14 percent in the past year, while London saw an 8.1 percent decline, according to data compiled by Bloomberg. Singapore is an outlier, with rents 2.4 percent higher.

Hong Kong rents may decline another 5 percent to 10 percent in 2021 due to a shrinking population and travel restrictions, according to Bloomberg analyst Patrick Wong.

The city's population fell 0.6 percent last year to 7.47 million and may drop further after Britain received 27,000 applications from Hong Kong citizens for British National (Overseas) visas, Wong said in a research note.

While the economy roared back in the first quarter at the fastest pace in a decade, the jobless rate was still 6.8 percent in March, close to a 17-year high set in the previous quarter.

Sammy Po Siu-ming, chief executive of Midland Realty's residential division, said the rental drop has recovered since last month.

Po believes mainland investors will fill the vacancy in the luxury flat market and expects rents to rise 3 percent to 4 percent this year if the Covid-19 situation is contained.

In other property news, actor Simon Yam Tat-wah bought a 1,094-sq-ft unit at Regent On The Park in Mid-Levels for HK$37.4 million.

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