High end hard hit
WITH the residential sales market still in a slump, estate agents report a buoyant leasing market with only the top end of the market suffering any sort of 'major decline' in rents.
As a general rule, estate agents agree that residential rents have dropped between five and 10 per cent across the board.
However, they say rents for flats and houses of $200,0000 per month and up have dropped by as much as 20 per cent.
Jan McNally, head of residential sales with Richard Ellis, said there were still clients prepared to pay between $80,000 and $140,000 per month in rent.
'It's actually surprising,' she said. 'People are retrenching. But some coming to Hong Kong are willing to pay $80,000 and upwards.' Well-maintained, single-owner buildings in good locations, like the south side, Mid-Levels or Jardine's Lookout, where supply is limited, are still capable of commanding premium rents.
A 2,900-square-foot flat in Queen's Garden can still command a rent of between $123,00 and $130,000 per month. The same applied to Pacific View and Dynasty Court where agents say rents have only fallen by five per cent in the last six months.
Figures compiled by Midland Realty show flats on the south side of Hong Kong island, long considered a prestige area, have come down seven per cent since the beginning of the year.
While there are big spenders around, many estate agents agree there are fewer of them. At the height of the market last year, there was such a demand for flats of more than $200,000 per month that names of prospective clients were put on waiting lists.
That is no longer the case. Rents at the top end of the market have come down significantly and it is easier to find vacancies.
'Last year, in places like Strawberry Hill and Redhill Peninsula, you had to get on a waiting list for a $200,000 townhouse or flat,' said a spokesman for Colliers Jardine's research department.
'Now, there are vacancies and landlords are willing to negotiate.' Estate agents said the reason is that corporations have become more cost-conscious and are trimming expatriate housing allowances.
This has put pressure on new arrivals looking for cheaper alternatives in housing.
Fredy Wu, assistant sales manager with Midland Realty in Repulse Bay, said there was a lot of activity in the $80,000 to $100,000 bracket.
He said that if people were renting at $100,000 two years ago, they would probably be looking now in the $80,000 per month bracket.
Mr Wu said rents between $40,000 and $80,000 per month were 'fairly stable'.
According to most estate agents, the single most popular and affordable area is the Mid-Levels where rents range from $10,000 to $60,000 per month. One of the popular rental categories was between $40,000 and $60,000, Mr Wu said.
'There is a lot of activity in this part of the market,' he said. 'There are a lot of new people from the US and Europe and they are looking for luxury-type flats. So, in this category, the market is still quite good.' Doris Chan, branch manager with L & D Associates, said some rents in the Mid-Levels were in fact going up, depending on the age of the building.
For instance, she said rents in Robinson Place had increased slightly in the last month.
There are good deals to be had in the area with rents below $30,000 up to $40,000 per month.
However, because of the high demand, she said the range of flats with rents between $30,000 and $55,000 'was quite tight'.
This situation was expected to improve when a large number of flats at Blessing Gardens came on to the market.
Most agents said rents for the better-equipped units had not fallen much - at best a few dollars per square foot.
They said the problem with serviced apartments was demand. There are an estimated 3,000 units in Hong Kong and this number cannot possibly meet demand.
In the final analysis, while residential rents have fallen in Hong Kong since the beginning of the year, the territory remains the world's second-most expensive place to rent accommodation.