Residential rents dip in Q4 2022 due to weak volume

Luxury apartments rent in Hong Kong Island was down by 3.1% QoQ.

Hong Kong residential rents declined in the fourth quarter of 2024 on the back of weak volumes, with the latest “0+0” arrival policy having a “very minor” impact, but declining prices are seen to drive people to rent.

In a report, Savills said there was only little change in the activity levels in the third quarter but the landlords are becoming more flexible in negotiations by the year-end as many are looking into leasing vacant units before the “traditionally quiet run-up” before the Chinese New Year.

“Generally weak market conditions prevailed at the close of 2022 and looking into next year we expect to see a subdued first half with some upside risk from recovering business sentiment and a more porous Mainland border,” said Simon Smith, Savills Research & Consultancy.

READ MORE: Residential prices to drop by 0%-5% in 2023

In Hong Kong Island and New Territories, luxury apartment rent declined by 3.1% and 1.1% quarter-on-quarter (QoQ), respectively. Luxury rents in Kowloon were “relatively stable,” increasing by 0.1% QoQ.

Townhouse rents posted the highest decline of 5.8% QoQ, whilst serviced apartment rent was down by 0.8% QoQ.

Whilst the rates of decline slowed in 2022 at 3.6% for Hong Kong Island luxury apartments and 3.4% townhouses, Savills said the market is on “shaky ground” and vacancies remained by the end of the year.

The improvement of the luxury residential leasing market is tied to the core office demand which remains weak following the 2019 social unrest and pandemic restrictions.

“Next year should hopefully see some revival in demand from businesses looking to capitalize on Hong Kong’s turnaround as restrictions are loosened and the border with the Mainland reopens,” Savills said.

“With this in mind, we expect luxury apartment rents to remain subdued through the first half of 2023 with the possibility of a modest rally in the second half to end the year 0% to 5% up,” it added.

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