Hong Kong Rental Market Expected to Thrive in Second Half of 2023, Despite Volatility in Home Prices

Hong Kong's housing market is expected to experience continued growth in rental prices in the second half of 2023, despite ongoing volatility in home prices, according to a report by real estate services firm Cushman and Wakefield.

Following the reopening of the border with mainland China in February, the housing market initially saw a recovery in prices, with a cumulative increase of 4.9% in lived-in home prices over the past five months. However, factors such as high interest rates, stock market fluctuations, and geopolitical tensions are expected to dampen the recovery in residential prices.

On the other hand, the leasing market has witnessed growth since the border reopening, benefiting from the Hong Kong government's Top Talent Pass Scheme aimed at attracting more talent to the city. The rental index has already risen by 4% over the past four months, reflecting positive signs for the leasing market. Cushman's executive director and head of research, Rosanna Tang, noted that the rental market is expected to perform more stably compared to home prices this year, with a projected increase of around 5 to 8% in the rental index.

While forecasts for Hong Kong's property market in the second half of the year diverge, with some analysts predicting a recovery and others highlighting potential headwinds, Cushman expects more price volatility and projects a 3 to 7% increase in home prices for the year. Other analysts, such as Raymond Cheng from CGS-CIMB Securities and Derek Chan from Ricacorp Properties, share a similar outlook, expecting modest price increases. In contrast, Knight Frank anticipates a drop of up to 5% in lived-in home prices for the whole year, citing ongoing interest rate factors that may persist until early next year.

Reflecting the growing demand for rental options, Sun Hung Kai Properties announced the launch of its flagship rental project, Townplace West Kowloon, in the second half of 2023. The project, comprising 843 units, aims to cater to the influx of young talent attracted by Hong Kong's new immigration policy for hiring top talent. The developer acknowledged the significant increase in demand for rental properties among young professionals due to the policy's introduction.

As the Hong Kong property market continues to navigate various challenges and factors, rental prices are expected to maintain growth, providing stability compared to the more volatile home prices. The competition for rental options is fueled by the city's efforts to attract top talent, further shaping the dynamics of the housing market in the coming months.

By fLEXI tEAM