Rents for luxury homes will probably remain unchanged this quarter, but could be under pressure in the new year until the overall economy recovers, says property consultant CBRE.
In the mass housing market, however, rents are expected to show continuing growth.
Data collated by CBRE show luxury rents edged up by just 0.3 per cent quarter on quarter in the third quarter. But the modest gain still left rents down 9.2 per cent on the same quarter last year when the sector hit peak levels.
Demand for luxury residential leasing slowed in the third quarter after the market witnessed a quiet summer holiday, noted CBRE, and there has been a slowing in the arrival of expatriates since the global financial crisis, said Edward Farrelly, CBRE's director of research for Hong Kong, Taiwan and Macau.
In the first half the year, expat numbers were down by roughly 10 per cent on the first half of 2011, he said. The financial sector in Hong Kong also saw more lay-offs and tightening of staff budgets as part of a wider global redundancy trend. These developments combined to remove support for rents, according to Farrelly.
"On the back of this, the third quarter vacancy rate was also up by 0.5 percentage points from a year ago to around 1.5 per cent," he said.
CBRE believes more mainland companies will set up offices in Hong Kong as it evolves into the mainland's official offshore yuan centre, and this trend could support leasing demand in high-end properties in the longer run.
But rental growth was likely to be stalled until the overall economy and the finance sector resumed their growth.
In the mass market, average monthly rents at 85 estates monitored by Centaline Property Agency showed a rise of 11.3 per cent in the first nine months to HK$21.70 per square foot. Centaline expects rents will go to HK$22 per square foot by the end of the year due to strong demand.