Luxury homes to see slower rent growth
Sluggish global economy dampening demand for high-end flats while fuelling strong growth for mass-market units, says consultancy
Rents for luxury homes in Hong Kong may rise just 2 per cent this year, but those for mass-market flats could jump as much as 10 per cent, Jones Lang LaSalle said.
The property consultancy found rents for luxury homes continued to drop in the first quarter as a sluggish global economy dampened demand.
The firm had revised its full-year estimate for growth in rents of luxury flats to 2 per cent from 4 per cent, said Denis Ma On-ping, its director of research for the greater Pearl River delta region.
However, the firm expects rents for mass-market flats to grow between 5 per cent and 10 per cent.
"We thought the market would be more stable in the first quarter, but luxury residential flat rents dropped 1.2 per cent [quarter on quarter] during the period," Ma said. "The banking and finance sector is not [doing very well], so the demand for high-end luxury flats is not strong."
Expatriates' housing allowances had been cut because of the sluggish European and US economies and corporate restructuring, he said.
The firm found that rents for luxury homes on Hong Kong Island fell 1.4 per cent in the first quarter, with the Mid-Levels and Island South recording the largest drop of 1.5 per cent, to HK$40.50 and HK$40.90 per square foot per month, respectively.