HONG KONG: Rents of luxury residential apartments and serviced units are back on the rise as expatriate businessmen return to Hong Kong following their withdrawal at the height of the global financial crisis, property agents say.
"In the last two months we have rented out three houses at Three Bays in Stanley after their previous leases expired. One of the houses was leased for HK$240,000 [RM102,600] a month -- up from a lease of HK$220,000 for a similar house signed three months ago," said Victor Tin Sio-un, deputy general manager of Sino Group's leasing department.
"That is an indication of how sharp the rental growth has been," Tin said. The monthly rent paid for a 3,540 sq ft beach house at the Hong Kong Gold Coast in Tuen Mun had risen by 17 per cent from HK$72,000 in December last year to HK$84,000 a month, he said.
"Demand from senior executives has begun to pick up and transactions involving luxury houses became active in January."
Another property agent said the renewed demand came mainly from executives in the financial sector. "New tenants are mainly senior executives from HSBC, Deutsche Bank and the Bank of Montreal," he said.
"The relocation of the HSBC global chief executive's office and other financial institutions has brought new demand to the leasing market."
HSBC global chief executive Michael Geoghegan and several other senior officers were relocated to Hong Kong last month. RBS, Thomson Reuters and JPMorgan's private bank also moved their top executives here last month. Previously, prospective tenants used to visit a flat at least twice before deciding whether to rent. However, many now made up their minds after the first visit.
"They worry they might lose the flat if they act slowly. The supply of luxury residential units for rent is on the decline as many flat owners are showing a preference to sell their properties rather than lease them after the sharp increase in property prices," he said.
Sino said it was seeing about a third more visits to flats by interested tenants in the last two months compared with a year ago.
Rents for serviced apartments was also starting to rebound said Margaret Ng, senior director of research at CB Richard Ellis. The firm visited major serviced apartments earlier this month and found that monthly rentals that had been flat previously were now up by between 5% and 10% a month. "We have seen more foreign garment and IT companies from Europe such as British's Red Ink coming to set up offices in Hong Kong. They are targeting the mainland market as the domestic consumption is strong -- and Hong Kong is the best place as a stepping stones to enter the market," Ng said.
Simon Lo, director of research and advisory at Colliers International, said studio-type serviced apartments were particularly popular after the Lunar New Year in February.
"Monthly rents for these kinds of flats range from HK$20,000 to HK$30,000. That fits the requirements of junior grade foreign expatriates," he said.
However, the demand for serviced suites with a higher monthly rent was stable as most of the companies were still cautious on expansion.
According to the research by Colliers, the average rent for luxury residential and serviced apartments rose 2% and 3.06% to HK$39 and HK$47 per sq ft respectively in the first two months of the year.
It appeared that the market for serviced apartments and luxury residential leasing had not yet fully recovered from the impact of the financial crisis, though the prices for high-end housing had already exceeded the previous market peak in 2007, it said.
Average rent for serviced apartments and luxury residential units were 8.19% and 11.72% below September 2008 levels respectively, it noted.
"But demand is recovering. We will see stronger growth in the rental of serviced apartments and luxury residential flats this year," Lo said. He expected luxury residential rents to rise a further 13% in the next 12 months.
Ng said the firm had previously forecasted luxury residential rents would rise 10% this year following a 5% growth in the fourth quarter of last year. "But growth may now be higher than our earlier expectations. We may revise our forecast upwards." – South China Morning Post
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