Robust Leasing Demand Amid Challenging Market

• The rental indices for luxury apartments in Kowloon increased by 4% quarter-on-quarter.
  
  
• High demand from lower income tenants, they showed a preference for new developments, particularly in LOHAS PARK and locations above Wong Chuk Hang Station.
  
  
• Growing interest from shipping and aviation industry professionals and expatriates in luxury properties.
  
  
• Serviced apartments in Wan Chai, Tin Hau, and Sheung Wan favoured by Mainland talents, while Central attracts higher budget tenants.

Robust Activity Drives the Market
During July and August, the Hong Kong residential leasing market experienced robust activity, especially in the HK$20,000 to HK$50,000 rental range. This rental segment garnered a substantial number of inquiries, reflecting the preferences and budgets of newcomers to the city. The rental indices for luxury apartments in Kowloon increased by 4% quarter-on-quarter, while both Hong Kong Island and New Territories witnessed a slight increase of 0.9% in their luxury apartments rental indices.

Increasing importance of apartment interior renovations to meet tenant expectations
A notable trend observed during this period was the increasing importance of apartment interior renovations. Tenants sought fresh and modern designs, leading to a rise in the significance of well-renovated properties. Some properties, like Residence Bel-Air, saw diminishing attractiveness due to inconveniences and minimal interior design. In response, landlords have undertaken renovations to align their properties with tenant expectations.

High Demand for New Developments
New developments, especially those in the later phases of LOHAS PARK in Tseung Kwan O and locations above Wong Chuk Hang Station, were highly sought after by tenants. These areas offered attractive options for newcomers, particularly those with incomes ranging from HK$20,000 to HK$50,000. Moreover, Kowloon Station remain popular for expatriates from France and Japan with budget up to HK$50,000.

Shipping and Aviation Industry Professionals Return in Demand
There was an increased interest in luxury apartments and townhouses on Hong Kong Island from individuals in the shipping industry, including Russians and Middle Eastern expatriates. The individuals considering relocating to Hong Kong to set up offices contributed to the demand for high-end residential properties, resulting in a 4.2% increase in the overall rental indices of townhouses. In addition, Cathay Pacific (CX) pilots, with budgets of around HK$50,000, demonstrated a return in demand. Serviced apartments in Mid-Levels emerged as their top choice. While many pilots were going for short-term contracts, there is potential for them to transition to the normal leasing market if their employment status changes.

Favoured Service Apartments Locations
The rental indices for serviced apartments experienced a slight decrease of 0.1% quarter-on-quarter. However, Wan Chai, Tin Hau, and Sheung Wan remained favoured locations for Mainland talents with budgets ranging from HK$20,000 to HK$30,000, thanks to their affordability and accessibility. On the other hand, tenants with slightly higher budgets were drawn to premium serviced apartments in Central, seeking upscale amenities and central locations.

Mr. Jack Tong, Director, Research & Consultancy of Savills commented, “Hong Kong residential leasing market experienced a bustling summer season marked by a surge in inquiries but a shortage of high quality housing options.”

Ms. Aradhana Khemaney, Senior Director, Head of Residential Services of Savills said, “Premium serviced apartments, exemplified by locations like Four Seasons Place, experienced strong demand from high-budget individuals, particularly finance professionals from Mainland China, Europe (excluding the UK), Singapore, and India. However, demand from high-budget expatriates from the US and UK weakened during Q3/2023.”