Falling rents are giving tenants a chance to upgrade at lower cost.
Research by Midland Realty shows average rents for private housing dropped 4.1 per cent from their peak in August last year to HK$20.09 per square foot in December. 'We found the number of flats in the 100 major housing estates released for leasing increased about 10 per cent in the second half of last year. That put residential rents under downward pressure,' Midland senior research manager Anita Cheung said.
Rents in the major housing estates that attract more investors, such as Taikoo Shing in Quarry Bay, South Horizons in Ap Lei Chau, Mei Foo Sun Chuen and the Sha Tin Centre, dropped the most. Data from Ricacorp Properties showed rents in these estates dropped by 6.7 to 9.2 per cent year on year in December.
Taikoo Shing recorded the sharpest fall last month as more vendors released their flats for leasing instead of selling. The average rent on the estate fell 9.2 per cent from HK$29.40 per square foot in November to HK$26.70 per square foot.
Ricacorp's head of research, Patrick Chow Moon-kit, said rents in Taikoo Shing used to be higher than those in nearby Nan Fung Sun Chuen, which are 34 to 35 years old but where the living environment is better. 'But recently we found that owners of some flats at Taikoo Shing were asking for only HK$25 per square foot.' Nan Fung Sun Chuen rents were still a minimum HK$26 per square foot, he said.
New projects also saw sharper falls in rents due to more flats being offered for lease.
Asking rents at Oceanaire, a new project by Cheung Kong in Ma On Shan, are only about HK$14 per square foot, lower than the HK$17.40 at 18-year-old Sunshine City nearby.