Housing rents in Hong Kong are expected to recoup all the losses caused by the social unrest and the Covid-19 pandemic, with analysts predicting a record in the coming months as the economic outlook brightens.
Rents climbed for a sixth month in August for a cumulative gain of 4.7 per cent to 182.2, according to an index published by the Rating and Valuation Department. The index reached an all-time high of 200.1 in August 2019 before crashing in the subsequent nine months amid anti-government protests.
Hong Kong’s economy grew 7.5 per cent in the second quarter from a year earlier, and official reports since June showed retail sales jumped in July and August while the outlook for exports has improved over the past five quarters. The government is working to reopen the border with mainland China, although this may take more than four to five months, a government health adviser said.
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“As the economy recovers, unemployment [rate] falls, rents are expected to rise,” said Sammy Po, chief executive of Midland Realty’s residential department. He expects the record to be broken over the next six to 12 months. “What’s more, if the border really reopens [further], even more mainlanders will come.”
The border reopening could pave the way for the return of mainland Chinese students and new job-market entrants to Hong Kong, fanning demand for housing near universities, according to Ricacorp Properties. Recent sales by homeowners have also displaced their tenants, pushing them into the market, it added.
The Merton in Kennedy Town, located near the Hong Kong University, saw the biggest rental increase among 133 private housing estates tracked by Centaline. It jumped 15.4 per cent in August to HK$49.54 per square foot, data compiled by the agency showed.
“More people are renting flats, while supply is not catching up to fulfil the demand,” said Rebecca Lui, senior manager at Ricacorp. “We have clearly told tenants that there are not many [listings]. The rent has to be more expensive.”
Louis Chan, Asia-Pacific vice-chairman and chief executive of the residential division at Centaline Property Agency, echoed the view. Rents could increase by 5 per cent in the fourth quarter before charging past the old record over the next six to 12 months, he added.
One of the hottest areas is expected to be the southern side of Hong Kong Island, said Victoria Allan, founder and managing director of Habitat Property. There’s a premium for properties with ample built-up areas, coveted by people who are spending more time working from home.
One example is a 2,580 sq ft flat in Stanley Knoll, where an unrenovated unit is on the market for HK$150,000 (US$19,264) a month, some 25 per cent more than a year ago. Similarly, the asking price at Grosse Pointe Villa in Stanley has risen by a quarter to HK$130,000 over the same period.
“We expect rents to continue to rise 5 to 10 per cent over the next 12 months,” said Allan. “Increases will be higher for those properties on the south side [of Hong Kong Island] with ample outdoor space as these properties tend to meet Covid lifestyle demand.”
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This article Bad news for Hong Kong tenants as rents predicted to chart record-high in coming months first appeared on South China Morning Post