Influx of expats in HK lifts demand for high-end units

HONG KONG: The return of expatriate executives to Hong Kong has increased leasing demand for high-end residential units as well as serviced apartments, according to property consultancy Jones Lang LaSalle (JLL).

The improvement in the residential leasing market is taking place against the backdrop of a recovering economy, which has prompted companies to resume expansion plans, JLL said.

In March, Hong Kong saw a 15% year-on-year rise in the number of new families relocating to the city, primarily driven by the financial sector, and the trend is expected to continue in the second quarter.

The influx of new families, coupled with the buoyant sales market, has driven down vacancy levels and rentals in the luxury residential sector have risen an average 4.8% while capital values are up 8.1%, JLL said.

Anne-Marie Sage, regional director and head of residential leasing and relocation services at JLL, said the improvement in the market was due to the resumption of expansion plans by firms -- particularly large multinationals.

"Rentals for serviced apartments had already risen by 6.7% in 2H2009, and rose a further 1.7% in 1Q2010," she said.

JLL said developments in the residential market were synchronised with the firming trend in the take-up of commercial space.

In the first quarter, total net take-up in the office market was 906,198 sq ft, it said, which was the highest level recorded in a quarter since the first three months of 2008.

Some 17% of senior executives who enjoy housing benefits have monthly housing allowances ranging from HK$100,000 (RM41,500) to more than HK$250,000, and the banking and finance industry was the most generous in providing rental allowances to senior executives.

The supply of large and luxury residential units was forecast to remain tight until 2012, contributing to the rising rental prices, Sage said.

Nearly 76% of these units are located in Kowloon and the New Territories, with only about 24%, or 1,505 units, on Hong Kong Island.

The future supply of serviced apartments is even thinner, with just under 250 units to be launched in 2010, all of which will be located on Hong Kong Island.

With more new families relocating to Hong Kong and supply in the luxury residential sector expected to remain tight, luxury residential rentals would likely continue rising for the rest of the year with a 15% overall increase by year's end, Sage said. – South China Morning Post