Rents in the most expensive housing market in the world
KUALA LUMPUR (Oct 11): Do you ever complain about rental prices in the Klang Valley or other urban centres in Malaysia?
Well, take a look at the situation in Hong Kong and count our lucky stars. According to media reports, the average cost of renting a 450 sq ft flat in the former British colony has risen for 17 consecutive months to a record HK$15,900 (RM8,500) per month.
The South China Morning Post (SCMP) reported that there is not a single flat in a large estate offered below HK$15,000 per month on Hong Kong island.
A 200 sq ft studio in a 30-year-old development in Wan Chai costs more than HK$16,000, reported the daily.
According to Centaline Property Agency, these prices have turned Hong Kong into the most expensive housing market in the world.
“There’s a shortage of tiny flats in the city’s downtown, compared to huge rental demand from single young people,” Wong Leung-sing, associate director of research at Centaline Property Agency, told SCMP.
And high rents will continue (particularly for small to medium-sized flats) until home purchase prices in the city start coming down, Thomas Lam, head of valuation at Knight Frank told SCMP.
Hong Kong’s residential prices have gone up 75.9% compared to the market peak in 1997 after the city island was handed back to China, according to global real estate firm JLL.
In its Land and Residential Market Review report in June, JLL said capital values of mass and luxury residential rose 9.1% and 7.5% respectively, in their first five months of 2017.
“Leasing activity gathered pace through the first five months of 2017, though ongoing downgrading trends led to a hike in vacancy levels in the top-end of the market. Still, luxury residential rents were able to edge up 0.8% over the same period.
“With prices hitting new record highs, developers have increasingly sought to build smaller units, to keep lump sums affordable. The average size of new flats currently under construction stands at about 600 sq ft, which is the smallest since 2001,” said the report.
And things look the same for the city’s commercial real estate segment.
Skycrapers in Hong Kong are the most expensive commercial real estate assets globally, according to Knight Frank.
“The pricing for skyscrapers in Hong Kong has reached US$8,000 [RM34,342] psf, over 60% higher than tall buildings in Tokyo, where pricing is estimated at US$4,900 psf, as compared to other global cities like Manhattan or New York at US$3,700 psf and London at US$2,450 psf,” said Knight Frank.
“In Hong Kong, continued strong demand and a lack of new land supply continues to push values higher, while the structure of the Mumbai office market has tended to see office markets develop outwards rather than upwards,” said Knight Frank head of research for Asia Pacific Nicholas Holt.
Recently, Hong Kong developer Henderson Land has paid US$3 billion (RM12.65 billion) for an old five-storey car park, indicating the frenzied state of the territory’s property market.