Ho Man Tin and Shouson Hill tipped for Hong Kong’s highest residential rent increases in 2018
Convenience and accessibility seem to be the main drivers: areas affected by new MTR line and stations predicted to have the highest increases. Meanwhile Sham Shui Po, Prince Edward and Braemar Hill are expected to have the steepest drops
It’s a question constantly in the minds of many Hongkongers: which districts offer the best value for money when it comes to renting? As areas become gentrified, more accessible or fall out of favour, rents are subject to fluctuations over time.
New research based on algorithms taking into account past movements in Hong Kong’s residential property market indicates which neighbourhoods will see the greatest rises and falls in rent in 2018.
Data from online property listings firm Spacious is based on 1.1 million property listings searches in 2017 on the spacious.hk website, and the 780,000 searches made on the site in 2016. At any given moment, the site has about 30,000 rental listings for Hong Kong.
The area predicted to see the biggest increase in rentals in 2018 on Hong Kong Island is Shouson Hill, with a 16 per cent rise. Other areas expected to become more expensive to rent a home include Ap Lei Chau (12 per cent), Deep Water Bay (10 per cent), Sheung Wan and Tai Hang (both eight per cent).
The data also predicts where rents will fall most on the island, with Braemar Hill topping the bill, (down 11 per cent), followed by Cyberport and Quarry Bay (both down nine per cent), North Point and Tai Tam (both down five per cent).
In Kowloon, the figures predict the biggest increase in home rentals in Ho Man Tin (18 per cent), with the next highest areas being Mong Kok (13 per cent), Jordan (nine per cent), Tsim Sha Tsui (seven per cent), and Hung Hom (six per cent).
The steepest projected rental drops in Kowloon are expected to be seen in Sham Shui Po (down 17 per cent), Prince Edward (down 14 per cent), West Kowloon (down eight per cent), Tai Kok Tsui (down seven per cent), and Yau Ma Tei (down six per cent).
The most significant factor on Hong Kong Island appears to have been the South Island Line of the Mass Transit Railway (MTR) system, which went into service in December 2016. All of the areas along the route were positively affected, leading to an increase in demand of rental property on Hong Kong Island’s south side.
“People would now seem to prefer living in places like Shouson Hill and Ap Lei Chau because of their accessibility to the MTR. The MTR has been a massive driver when it comes to rent hikes in these areas,” says James Fisher, Spacious’ director of market analysis.
“Yes, North Point and Quarry Bay have easy access to MTR stations and are only 20 minutes from Central, but now the whole south side is only 20 minutes away from Central by MTR too, thanks to the South Island Line,” he says, adding that convenient access to the MTR is already factored into rents along older sections of the network.
Laurie Lankester, associate director of HK Residential and Relocation Services at JLL, agrees that rentals in Hong Kong’s south side are definitely on the up.
“The opening of the South Island MTR line with a five-minute train journey from Wong Chuk Hang to Admiralty has improved accessibility, especially in locations such as Ap Lei Chau and Shouson Hill, but also further afield in Repulse Bay, Stanley and Tai Tam,” he says.
“Despite continued high rents, the south side of Hong Kong Island has always been a popular choice with families, offering more of a ‘relaxed’ environment close to country parks and beaches with a wide choice of international schools and kindergartens.”
The expansion of the MTR network has also affected neighbourhoods such as Ho Man Tin and Hung Hom in Kowloon.
“The same rationale applies to Ho Man Tin on Kowloon side, which is a new stop that opened in late 2016 on the Kwun Tong Line,” Fisher says. “It has meant Hung Hom is more accessible. Everyone wants to be beside an MTR station. It’s a major search criteria for us and it’s coming out in the numbers.”
Backing this up was the news last month that CK Asset Holdings had revised upwards its target price for the tender of nine villas at Stars By The Harbour in Hung Hom by HK$300 million (US$38.3 million), or 20 per cent, to HK$2.16 billion.
Another factor that is making the south side of Hong Kong Island increasingly attractive is the gentrification that has come along with the MTR.
“With the gentrification of Wong Chuk Hang over the past five years, we are seeing hotels replace warehouses,” says Paul Lucas, vice-president of Dwellworks HK, which specialises in relocation support services. “Residents of Aberdeen through to Ap Lei Chau have witnessed their daily commutes (which were undertaken by public bus and required upwards of an hour due to the traffic bottleneck of the Aberdeen Tunnel) now require only 11 minutes to Admiralty.”
Lucas believed this is just the beginning of the story as property developers look to build aggressively to capitalise on this new infrastructure in the area.
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“Above the Wong Chuk Hang MTR, 4,700 new residential units are planned. The project is expected to be half the size of Taikoo Shing, with over 47,000 square metres of shopping. The first phase of housing, expected to be completed in 2022, will bring 700 to 800 units online, and eight phases are initially planned,” Lucas says.
Alex King, co-owner of the Golden Monkey restaurant in Wong Chuk Hang, has worked in the area for the past eight years, and says it has slowly grown to become a destination for young fashionistas, hipsters, artists, creatives, and also home to many expatriates.
“Wong Chuk Hang is becoming the headquarters of all the big fashion and media companies already situated in Hong Kong. It is also home to many art galleries, design spaces, co-working spaces, and even fitness outlets,” King says. “It now attracts young creative businesses and individuals, creating a vibrant and diversified community.”
Spacious attributes the fall in rentals in Tai Tam, Cyberport and Braemar Hill on Hong Kong Island to the impact on high-end properties rented by those working in the banking and financial sectors, which are downsizing in the city.
According to a survey last month, Hong Kong remains the most expensive city in Asia for high-level expatriates to rent housing.
The city topped a poll by ECA International based on the monthly cost of a three-bedroom, mid-range flat in an area commonly inhabited by executive-level expats for a fifth straight year. The gap with other Asian cities widened.
The average rent for such a flat in Hong Kong is HK$81,848, beating second-placed Tokyo by more than US$2,000, ECA’s 2017 Accommodation Survey found. The figure was up four per cent from a year earlier.
However, the completion of the Guangzhou – Shenzhen – Hong Kong Express Rail Link, scheduled for later this year, may also encourage more expatriates to live in Kowloon, particularly Tsim Sha Tsui, because it will become more convenient to travel to China for work.
“I’m very bullish that rentals will rise in Tsim Sha Tsui because of the Express Rail Link. A quicker way of getting to China, where many people commute from Hong Kong to work, is bound to increase demand here. It’ll be totally realistic to live in Hong Kong and commute to work in China daily,” Fisher says.
Kai Tak is another area in Kowloon that Fisher feels will see increasing demand as redevelopment continues there.
Last month Wheelock Properties released the price list for 84 flats at Grand Oasis Kai Tak, the second phase of its Oasis Kai Tak project on the site of Hong Kong’s former airport, with prices at an average of HK$22,665 per square foot after factoring in a discount of as much as 16.5 per cent.
That is about 12 per cent higher than the HK$20,225 per square foot at the previous launch in September last year.
The cheapest flat at the Grand Oasis Kai Tak development, which is expected to be completed in June 2019, is a 360 sq ft unit costing HK$7.6 million.