Rental demand drops as Japanese, Korean expats tighten belts
Rental demand at housing estates traditionally popular with Japanese and Korean expatriates has tumbled by as much as a third due to cost-cutting among foreign firms in Hong Kong, property agents said.
Midland Realty's Kornhill assistant sales manager Nicko Lee Chi-wai said housing budgets for Japanese and Korean expats had fallen an average 10 to 15 per cent.
He said: 'The Asian economic crisis has definitely meant falling housing budgets for Japanese and Korean expats living in Hong Kong.' Midland's Taikoo area manager Wendy Ng Chui-har said a third of her rental business - most of the Japanese and Korean demand - had disappeared in recent months.
However, Ms Ng said that landlords had been surprisingly accommodating towards tenants' demands for rental revision of present leases.
'Landlords have no choice but to do so . . . [since] some expat tenants have already broken leases and moved out before their leases expired, because they could not afford to stay,' she said.
Some landlords have discounted rents to keep tenants willing to pay some of the difference between their housing budgets and rents.
Average rentals at Taikoo Shing have fallen to about $25 per square foot, down from about $31 per sq ft last September.
Kornhill has seen average rentals falling to about $20 per sq ft from $27 per sq ft.
Mr Lee said: 'Since last November, rents here have fallen quite considerably, by almost 25 per cent.' That compared unfavourably with a 20 per cent average fall in residential rents across Hong Kong Island over the same period, he said.
'A large proportion of flats in Kornhill are investment flats, so less rental demand is going to have an even larger effect on rents,' he said.