The latest data on Wednesday shows that the rent for private houses in Hong Kong increased in July, the highest in 5 years, and residential prices dropped by 22% during the same period.
Hong Kong developers are increasingly focusing on the housing rental and leasing market to handle the extended downturn in the property market and meet the soaring demand for rentals from mainland Chinese professionals and students.
This change in the developer’s approach is rare, especially in a city with the highest property process in the world.
The former British colony saw a massive flight of citizens, including expats, following the anti-government protests in 2019 and the pandemic. The demographic deficit is now majorly filled by the influx of mainland Chinese due to a range of talent admission schemes introduced in 2022.
The latest data on Wednesday shows that the rent for private houses in Hong Kong increased in July, the highest in 5 years, and residential prices dropped by 22% during the same period.
Since the locals chose to rent rather than buy due to an uncertain economic outlook, many anticipate a divergent trend in the home process, and rents will persist in the foreseeable future.
Henderson Land, a leading Hong Kong developer, says he would rent part of his Baker Circle Dover project in the Kowloon peninsula rather than sell it.
How many units were available for rent was not disclosed, but more than 20 units are leased for rent with a monthly rent of around HK$ 14,000 or $1,795 for a studio and HK$19,000 for one BHK flat.
Usually, developers put all their flats for sale in a residential complex.
The government’s various initiatives to attract talent have driven this demand in the residential leading sector. Hence, using part of the previous launch as a response to the market, Henderson said in a statement.
Its smaller competition, Chevalier International, also opened a new tab announcing this month that he would save 58 flats in the neighbouring district’s new building to meet the rental demand.
These projects have come since the city has approved 210,000 applicants under its two-year-old talent scheme. Under one of its programs, graduates from the top 100 universities in the world or those earning an annual salary of at least HK$2.5 million receive a 24-month visa to stay in Hong Kong.
Out of the approved, 140,000 have already arrived in Hong Kong, according to the CEO, John Lee. The property market has estimated that most of them are from mainland China.
Remodeling various real estate, including hotels and commercial and residential buildings for student housing, is another way these property investors are turning toward the rental market, according to realtors.
Since there is an increase in foreign student quota, there is more demand for student housing since it is tough to get a mortgage loan for an apartment in mainland China, says Raymond Lee, the CEO of real estate consultancy Savills Greater China.
Also, the Hong Kong government announced that from the 2024 academic year, the percentage of admissions for international students at the eight universities would be raised to 40%.
In the past two months, Hong Kong has seen at least three property deals to meet the growing demand from students.
The Hong Kong Metro Metropolitan University purchased a newly constructed hotel with 255 rooms for HK$1 billion to use as a student dormitory. It is the largest housing transaction to date.
Students are willing to pay extra because of the fear of pricing out, despite Lee’s warning that the student housing market will drop over time if the supply grows swiftly.
A student from the northeastern Chinese city of Shenyang recently moved into a two-bedroom flat close to the University of Hong Kong and said they are glad to get a new lease in June, worth HK$500 more per head than their previous flat.