According to Savills Hong Kong, strong demand for premium houses on the Peak contrasts with low interest in luxury rentals priced between HK$100,000 and HK$200,000. Diverse tenant profiles and budget constraints complicate the market, but local interest grows in mid-high-end rentals, maintaining a sustained occupancy rate of 70%.
The Hong Kong residential leasing market is witnessing significant changes in tenant profiles and preferences post-Covid, according to Savills in its ‘Market in Minutes – Hong Kong Residential Leasing’ report of February 2024.
Demand for Luxury Houses on the Peak
Despite challenging macroeconomic conditions, high-net-worth individuals from Mainland China continue to exhibit strong demand for houses on the Peak. This preference contributes to sustained demand in the luxury housing segment. Recent notable transactions, such as 28 Barker Road on The Peak and Shouson Peak in Southside, have recorded monthly rentals of approximately HK$600K – 650K. Additionally, rental indices for Kowloon and the townhouse sectors have experienced a slight quarter-on-quarter increase of 1.9% to 2.1%.
Tenants Opting for Slight Reductions in Rental Budgets
On the other hand, the luxury residential segment in the HK$100,000 to HK$200,000 per month range is currently experiencing low demand. Additionally, the number of expatriates with family members has declined after Covid, resulting in potential adjustments to residential leasing budgets. The difficult macroeconomic circumstances have prompted some of the above tenants to slightly reduce their rental budgets.
Diverse Tenants, Varied Budgets
Diverse tenant profiles and varying budget considerations added intricacy to the dynamics of the leasing market. Family tenants from Mainland China form a significant portion of the tenant demographic, while corporate clients primarily come from Asia and Europe. Expatriates from different investment banks exhibit varying budgets, with monthly rents spanning from HK$40,000 to HK$80,000. This diversity in tenant profiles and budget considerations adds intricacy to the dynamics of the leasing market in Hong Kong.
Serviced apartments in Central and Western District continue to cater to the demand of expatriates and students. These apartments maintain a sustained occupancy rate of 70%, driven by factors such as their central location, ongoing individual projects, and proximity to educational institutions. Recognising the financial constraints of students, it’s noteworthy that monthly rents for this demographic hover around HK$15,000 to HK$20,000.
Jack Tong, Director, Research & Consultancy of Savills commented, “The tenant profile in the residential leasing market has significantly changed post-Covid, with expectations of a more versatile clientele going into 2024.”
Sdever Li, Director, Residential Services of Savills said, “There is a noticeable trend of growing interest from local users in the mid-high-end residential leasing market. Professionals such as doctors and lawyers are opting to sell their properties and explore rental options amid declining property prices, contributing to increased demand in the leasing market.”
