Hong Kong RENTs : Rising, esp. near MTR Stations

[drbubb]

Hong Kong RENTs : Rising, especially near MTR Stations

CHARTS

Domestic Rents, etc. to end- 2009 / note: they were Higher in 1997-98

 

Prices moved up faster than Rents to the end of 2012

 

 

Luxury Rents had been moving up fast into 2011

... but in 2012 Luxury Rents started falling

 

 

Knight Frank : Luxury Rents vs. Prices

 

 

Back in 2012 "Real Rents" were near Zero

 

[drbubb]

(article): " month-on-month gains of 0.3 per cent in April and 1 per cent in May "

 

Rents also pick up steam in resurgent mass housing in Hong Kong

Strong demand from businesses and mainland students amid a tight supply of flats is likely to turn up the heat in the leasing sector

PUBLISHED : Wednesday, 25 June, 2014, 1:31am

• 

Taikoo Shing in Quarry Bay has recorded a significant increase in rents.

Home seekers troubled by recent rises in the mass-residential sector now have an old foe to contend with: a resurgent rental market.

 

The recent gains in rents at 50 major housing estates in Hong Kong have come despite prices heading the other way for luxury properties, suggesting a polarisation is occurring in the city's rental market.

 

The average rent at the 50 estates tracked by Ricacorp Properties has grown for the past two months, with month-on-month gains of 0.3 per cent in April and 1 per cent in May, after declining 0.29 per cent during the first quarter.

 

"Rents began to fall gradually since the end of last year. But the trend has changed since April and the rental growth was more obvious in May. [it was] the highest in 10 months," said Patrick Chow Moon-kit, Ricacorp's head of research.

 

According to Centaline Property Agency, a flat of about 500 square feet at the Beaumount in Tseung Kwan O was let out for HK$9,500 a month in March. A similar flat fetched HK$11,000 a month recently.

Taikoo Shing in Quarry Bay has also recorded a significant increase in rents.

Patrick Tsang, a director at Centaline, said rents at the housing estate had risen from HK$29 to HK$30 per square foot in January to HK$32 this month.

"The demand is strong. Some tenants sold their flats and then rented because they were pessimistic on the market outlook. We have also seen some tenants looking for a new flat to rent because the landlords have raised their rent. Corporate clients are active in the leasing market, too," he added.

 

However, of the 12,698 units at Taikoo Shing, only 22 were available for immediate leasing, Centaline said. This compares with an average of 75 flats before the government imposed cooling measures on the market in February last year.

"After property sales turned active in recent months, the number of flats available for rent has been decreasing. The tight supply of flats and strong demand have driven up the rents," Chow said.

Ricacorp found that rent rises were the strongest in the New Territories. Based on those estates that were among the 50 tracked by the agency, the average rent in the area in- creased 1.3 per cent last month. Demand was particularly strong at City One Shatin and Tai Po Centre.

 

For the overall mass-residential market, Chow expects rents to climb a further 3 per cent by September, aided by the absence of completions of any housing estates over the next three months.

"Summer is also a peak season for the mass-residential leasing market as many mainland students have to rent a flat before the school year begins. The demand during summer holidays will increase by 10 to 20 per cent, compared with April. It will be a landlords' market," Chow said.

He believes flats at housing estates along railway lines in the New Territories will see higher rental growth.

==

> http://www.scmp.com/property/hong-kong-china/article/1539674/rents-also-pick-steam-resurgent-mass-housing-hong-kong

 

=== ===

 

Remember, buying property, even older low Cap properties you rent out, helps to protect you from further rent increases. Those old property under $3-4 Million are now trading near record highs.

Expect further price increases in the secondary market, if/when Rents rise more

Meantime: "Luxury Rents have dropped 10% this year.

And are expected to drop a further 5-10% by year end." - says SCMP

(Note: many so-called "Luxury" properties are not near MTR stations. Too bad.)

[drbubb]

OFFICE RENTS : A Fascinating Correlation

 

Hang Seng Index vs. Gross Rental PSF ( HK Office rents )

 

> http://www.corporatelocations.com.hk/hong-kong-office-rent

 

=== ===

Date -------- : - HSI -- : Expect : Office R : Domestic Rents

: Year : Qtr- : -Index- : / 220.0 / A-Centr. / 630.0 /

2007-YrEnd : 27,813 : 127.42 /

2008-YrEnd : 14,387 : $65.40 /

2009-YrEnd : 21,873 : $99.42 /

2010-YrEnd : 23,035 : 104.70 /

2011-YrEnd : 18,434 : $83.79 /

2012-Q1 .... : 20,556 : $93.44 / 115.00 / 32.63 :

.......- Q2 .... : 19,441 : $88.37 /

.......- Q3 .... : 20,840 : $94.73 /

.......- Q4 .... : 22,657 : 102.99 /

2013-Q1 .... : 22,300 : 101.36 / $98.00 / 35.40 :

.......- Q2 .... : 20,803 : $99.56 / $98.00 / 33.02 : $33.11

.......- Q3 .... : 22,860 : 103.91 /

.......- Q4 .... : 23,245 : 105.66 /

2014-Q1 .... : 22,151 : 100.69 /

.......- Q2 .... : 22.900 e 104.09 /

===========

*33.11 - Apr.2014, based on the average of four calculations:

+ Midlevels : 75 sqM. : USD$ 18,616= 49.11/SM x7.76/10.76= HKD 35.42 psf

+ HK island : 120sqM : USD$ 23,012= 52.32/SM x7.76/10.76= HKD 37.73 psf

+ NTaparts : 70 sqM. : USD$ 10,077= 38.60/SM x7.76/10.76= HKD 27.84 psf

+ KowTong : 120sqM : USD$ 16,905= 43.61/SM x7.76/10.76= HKD 31.45 psf

(.7212) / Data Link : http://www.globalpropertyguide.com/Asia/Hong-Kong/Rental-Yields

=======

Latest Review : http://www.corporatelocations.com.hk/pdf/HKMarketUpdate_JUN14.pdf

The office rental market continues to converge with the top prime rates still softening, albeit at a slower rate and the economic/budget end of the market is firming.

Leasing activity is expected to remain subdued over the next 12 months

 

Many companies in the higher grade buildings who have standard three years leases coming up for review this year will be pleasantly surprised when they find they can probably renew their leases at rates significantly lower than their current rent. Rates in this sector have probably fallen by between 10% and 15% in the last two years so companies currently paying around $90 per sq ft may find they can possibly renew at around $75 - $80 per sq ft (effective).

However, the opposite is true at the other end of the market where those companies currently paying around $30.00 per sq ft are now faced with a rental hike up to around $40.00 per sq ft. This is because it is this sector that has seen the most demand with companies looking to save costs. The only exception to this is Kowloon East where rates were already competitive at around $25.00 - $30.00 per sq ft and have softened further to around $22.50 - $27.00 per sq ft (effective) due to increased supply.

==

> http://www.corporatelocations.com.hk/hong-kong-commercial-property-forecast

[drbubb]

RETAIL Rents have to Fall !

 

BIG JUMP in vacant shops - as landlord are slow to cut rents

+ Causeway Bay : 81 in Dec., 128 shops now : + 56%
+ Tsim Sha Tsui : 44 in Dec., 93 shops now
+ Mong Kok --- : 21 in Dec., 48 shops now : + 129%
+ Central ------ : 47 in Dec., 76 shops now : + 62%

The Cw.Bay vacancies are the highest since the SARS crisis in 2003.
Rent cuts have not been large enough, and retailers are losing interest
Retail sales have dropped 4.1% in the year to May.
But Cw.Bay rents dropped only 1.6% in the last quarter
(per today's SCMP)

[drbubb]

HK and China Property : Two Headlines in today's WSJ

 

(1) China Property Falls

Prices fell in July for the third consecutive month.

Buyer behavior has changed - they are now awaiting lower prices.

Yet prices now are still higher than 12 months earlier.

Home purchase restrictions are easing, so there could be a ST rebound.

A report from a Chinese research group suggested the country could not avoid

a deeper correction, with high inventories and vacancy rates...

It could take 2-3 years to recover, the source said

 

(2) Peak's Rents are Off the Peak

The normal summertime surge in demand for High-end apartments... is weak.

A shift away from banking, towards retail and other sectors among companies

who are relocating staff means lower rents

 

Average Luxury Rents

The Peak-- : HK$96,000 = US$12,500

Discovery Bay : $89,000 . . . $11,500

Mid-Levels---- : $88,000 . . . $11,400

Happy Valley- : $82,750 . . . $10,700

=====

(those of us who live in Olympic, regard these rents as "extravagent")

 

"There's been a minor bump (in demand), but not as big as most years"

 

"There's been a drop of 30-40% in demand over the past two years..."

"The higher the rental, the quieter it is."

 

One of the causalties of the financial crisis has been the company lease.

Instead, companies are paying housing allowances, increasing demand

for mid-range luxury rents, between HK$40,000 and 80,000.

 

3BR 2,500 SF Penthouse - in townhouse on the Peak,

Fell from HK$99,500 to HK$96,000

 

Cheaper 3BR's in Midlevels showed rising rents.

[drbubb]

With the HK property market now peaking out (maybe), it is interesting to review where gains were the best

We can now see...

We have seen some pretty terrific gains,

for "cheap" properties near MTR stations - since the Lows in 2003 and 2009

 

- in places like Fanling Centre - which are right next to MTR stops,

though far away from Central

 

Fanling Centre Per SF, gross : $7,727.32 Per SF, net : $9,932.14 1.10 %

 

Both rents and property prices have shown big gains:

 

The big rally from about $1500 (2003) to $8000 (2015): + 433% must be one of the biggest in Hong Kong.

 

An MTR link is coming from Shatin to Central, which will serve to reduce substantially the travel time to Central.

 

For HK as a whole, we have seen a gain from 32.16 (2003) to 146.76 (2015) - that's +356%

Some years ago, property agents with major firms, like Anne Marie Sage were telling their clients to stick to prime properties in prime locations, while I was telling people to think about buying cheaper properties with good transport links. We can now see clearly who was right.