Colliers sees luxury rents rising 15pc in a year in HK
Luxury home rents in Hong Kong are expected to increase a further 15 per cent in the next 12 months, Colliers International said.
The property agency said record rents were prompting some expatriates to spurn Hong Kong in favour of other cities in the region.
'Rents will continue to grow because of the strong local economy and inflation. Prices of luxury residential properties have already risen at a more drastic pace than their rents,' said Simon Lo Wing-fai, a director of research and advisory at the agency.
Colliers said the average monthly rent for luxury homes - those at least 1,200 square feet in size and located in traditional luxury areas such as The Peak - was HK$47.30 per square foot last month, up 37 per cent from two years ago, when rents dropped in the face of global financial turmoil, and 2.2 per cent above the previous peak average for luxury homes seen in 2008.
But the prices at which luxury homes were being bought had risen faster still, Lo said.
They had doubled in two years and were at least 20 per cent above the previous record level seen in 1997.
Lo said prices of luxury flats would rise 5 to 6 per cent over the next 12 months because of rising rents, despite fresh government measures to restrict mortgage lending.
With rents expected to rise, the rental yield on luxury apartments would improve from 2.5 per cent now to at least 2.7 per cent within 12 months, he said.
Lo said many companies were feeling the pinch from record-high rents, which meant it cost more to employ expatriates in Hong Kong, and the housing allowances they pay were not keeping pace with the increase in rents.
The high rents had put some expatriates off moving to the city, eroding its competitiveness.
'Usually, companies adjust the allowance level once a year and now they need to do it more often, such as twice a year,' he said.
Clara Chu Sau-chun, Colliers' director of residential leasing, said a lack of places in international schools - particularly primary schools - and poor air quality were other factors that affected the willingness of expatriates to move to Hong Kong.
'In some cases, we see some people moving to cities like Beijing, Shanghai and Singapore, where expatriates can more easily get their children into international schools,' Chu said.
She said many of those who chose to come to Hong Kong were staying in serviced apartments until their children's school places were confirmed.
Because of that, the agency sees more clients staying longer in serviced apartments.
Colliers forecast rents for serviced apartments will rise 13 per cent in the next 12 months.