Savills pointed out that the luxury apartment rental market remained largely stable, with a significant number of moving in and out of the case. The second quarter of 2017 luxury apartment rental market activity increased slightly over the same period last year. Low supply levels, coupled with the demand for brokers, property developers and Chinese-funded asset management companies, continued to increase rents on Hong Kong Island in the first quarter.
It is noted that expatriates are more receptive to the Hong Kong Island area than ever before and have moved to apartments such as Discovery Bay, Sha Tin, Tai Po and Tung Chung to have a lower rental rate and a better quality school and a better quality of life. On the Hong Kong Island area, the surrounding area also attracts tenants with limited budgets, which are discouraged by the rents of the traditional core luxury residential areas.
In the second quarter of 2017, the rents of luxury apartments rose by 1.7%, 3.3% and 1.4% respectively in Hong Kong, Kowloon and New Territories. Township villa rents continue to suffer, down 1.5%. While rental of serviced apartments rose from the first quarter of 2017 and continued to rise by 2.5% in the second quarter of 2017.
Savills, director of research and consultancy services, said the vacancy rate of institutional investors remained low and the demand for local and Mainland tenants was strong. Hong Kong Island and the New Territories are attractive to price-sensitive expatriates.
Pok Fu Lam (2.6%) and Happy Valley / Jardine’s Hill (+ 2.0%) recorded a significant increase in rents due to the relatively low rents in these areas. Tenants are beginning to pay attention to the eastbound area of Hong Kong Island, which is more cost-effective for the rental budget of $ 40,000 to $ 50,000.
Savills residential services director Wang Liwen refers to the popular places including Tung Lo Wan Road, Tai Hang Road, Quarry Bay and Sai Wan Ho. The Hong Kong University’s premises ($ 20,000 to $ 80,000) and Peshawan ($ 35,000 to $ 120,000 a month) at Pok Fu Lam are also a cost-effective option for budget-sensitive tenants.
Thanks to the new supply and the opening of the MTR Ho Wentian Station, Ho Man Tin / Kowloon Tong (3.9%) luxury apartment rents are the most resilient in Kowloon and the New Territories. Discovery Bay has a lot of affordable options, and 25 minutes ferry to reach Central, it is still sought after by the tenants, even more popular than the Saigon, while the recent heat has diminished. The Discovery Bay Independence Day rent can be as low as $ 90,000 and the price is far more than any rent on Hong Kong Island. The same monthly rental on Lantau Island can be as low as $ 20,000 or less. Tung Chung on Lantau Island offers a large number of small apartments, partly as low as $ 6,000 per month.
Despite the rent level and occupancy rate has picked up, serviced apartment market is still weak. Rental of hotel and apartment-style serviced apartments increased by 3.1% and 1.6% respectively in the second quarter of 2017, while the overall occupancy rate reached 79%, slightly higher than the 78% in the first quarter of 2017. Two-room serviced apartments are now more popular with one or more apartments, while the latter are facing more intense competition. The Garden East and One Ring are now welcomed by tenants because of the low rent ($ 25,000 or less) and the proximity to the Central Business District.