Leasing costs may rise at a slower pace compared to the previous year.
Rents for luxury apartments in Hong Kong could rise by 0 to 5% in 2019, Savills Research said, although this represents a slowdown from the 8% increase in leasing costs observed in 2018.
“Luxury apartment rents have seen two years of broad-based growth on Hong Kong Island as well as in Kowloon and the New Territories,” Simon Smith, senior director at Savills Research said in a report. “By the end of 2018, however, growth had begun to flag as limited options, rising relocation costs for tenants and escalating fit-out costs for landlords encouraged both parties to find middle ground and renew.”
Overall luxury apartment rents in Hong Kong remained unchanged in Q4 whilst rents in Kowloon and the New Territories were up by 1.0% and 0.5% respectively.
Year-end rents in Happy Valley/Jardine’s Lookout, Mid-Levels, and Pokfulam dipped 1.4%, 0.2%, and 0.6%, respectively.
Meanwhile, the firm believes that rents in Kowloon, Tsim Sha Tsui and West Kowloon will grow with the completion of the Express Rail Link which has improved Greater Bay Area connectivity.
“Journey times from West Kowloon to Shenzhen’s Futian Station and Guangzhou South Station have been cut to 14 minutes and 48 minutes respectively,” they explained. “The same was true of Tung Chung where bridge and air links continue to add to the area’s appeal amongst PRC tenants who often hail from Southern China.”
Meanwhile, the townhouse market rent recorded a 0.2% decrease in Q4 2018 to mark its first descent since Q3 2017. Despite this, Savills Research noted that tight availability is still a key factor supporting townhouse rents to grow by 5-10% in 2019 and extend the 10% gain in 2018.
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