The number of homes standing empty in Hong Kong may climb to an 18-year high in 2021 as thousands of families flee to the UK, according to a Bloomberg estimate.
The proportion of vacant units could surge to 5.4 per cent according to a Bloomberg Intelligence forecast based on a scenario in which 1 per cent of households vacate their private dwellings and head overseas.
The bulk of the estimated 11,737 departing households will be heading to Britain to take advantage of a government scheme to facilitate citizenship for holders of the British National (Overseas) passport, according to Bloomberg’s scenario.
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The forecast exodus would take the number of empty homes in Hong Kong to 66,683, up from 52,370 last year. For an idea of scale, that is more than five times the number of units in the gigantic Taikoo Shing housing estate in the east of Hong Kong Island.
Rents may slide by another 10 per cent in 2021 as the shrinking population threatens to stifle residential leasing, following a 6 per cent drop last year, according to Bloomberg’s research report.
“Landlords may struggle to find tenants for their vacant rental units amid Hong Kong’s sputtering economy, possibly hurting their bargaining power in rental negotiations,” said the report, led by Patrick Wong and Iwona Hovenko, real estate analysts with Bloomberg Intelligence.
About 300,000 Hong Kong residents are ultimately expected to emigrate to the UK under the BN(O) visa scheme, according to the British government, eventually pushing the vacancy rate as high as 8.2 per cent, or roughly 101,000 units.
Among them is Charlotte So, who recently quit her job in Hong Kong and will fly next Monday with her husband and 11 year-old son to start a new life in Kingston, an hour’s ride from central London.
“The possibility of coming back to Hong Kong is small, so we just sold our home even though it was some HK$500,000 below our asking prices,” said So, a former digital marketing professional.
“The macroenvironment, legal system, election and education systems have kept changing and we feel Hong Kong is a bit like a stranger to us, and it seems in the next couple of years, more of such changes will come. The UK is more child-raising friendly and also more relaxing for us in our 40s.”
So planned to use the profits from selling their two-bedroom flat in Sham Shui Po to buy a flat to live in in Kingston and another one or two units in other cities for leasing.
Last week, a 334 sq ft, one-bedroom unit in Park Summit in West Kowloon was leased out for HK$13,000 a month, having stood vacant for almost three months when the asking price was HK$16,000. In March, a 259 sq ft unit in Eltanin·Square Mile, part of the same neighbourhood, found its tenants only after the landlord agreed to cut HK$1,700, or 11 per cent from the asking rent.
“The supply of available rented homes increased as actually many of those leaving now are not comfortable with the political situation in the city. But they are not losing confidence in the economic development of Hong Kong, so we see many leave their homes for leasing when they depart,” said Shih Wing-ching, co-founder and chairman of Centaline Property Agency.
The Secretary for Transport and Housing, Frank Chan Fan, said last week the government has been collecting more data about vacant flats “to grasp the actual situation” and steer policy to address the issue.
“We will not rule out reintroducing the vacancy tax,” Chan said.
In the long term, market observers are still betting on the resilience of housing market and its ability to shrug off the possible wave of emigrations.
“Liquidity and business confidence are bigger drivers of the property market than emigration. Unless there is a massive exodus coupled with a drop in business confidence in Hong Kong, the emigration effect is unlikely to trigger a material impact on housing prices,” said Stephanie Lau, vice-president and senior analyst at Moody’s Investor Service.
Lived-in home prices have grown 2.7 per cent year-to-date to the highest level since July 2020, according to Centaline data.
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