• Thu
  • Aug 21, 2014
  • Updated: 3:34pm
PropertyHong Kong & China
RENTING

Expat tenants forced to move to cheaper areas to escape rising rents

Tenants look for cheaper apartments in areas such as Kennedy Town as agents predict that limited supply means prices are likely to keep rising

PUBLISHED : Wednesday, 12 February, 2014, 4:29am
UPDATED : Wednesday, 12 February, 2014, 4:29am

Rising rents and reduced living allowances are driving expatriate workers out of their preferred neighbourhoods as their leases come up for renewal, estate agents say.

John, an expatriate from Britain, has rented an apartment in Wan Chai for nearly a year. It is close to his office and offers all the convenience of city living.

However, he is now reluctantly searching for a cheaper apartment elsewhere.

"I'm paying a lot more here than I want to pay. I have lived in Europe and the Middle East before, and renting in Hong Kong is by far the worst. You pay more and get less for flats that are of a low quality," he said.

He is now looking for a flat in Kennedy Town and hoping to pay less than HK$10,000 a month.

John's experience is typical of a growing number of expatriate workers in the city, who are relocating to outlying districts because of increasing rents, property agents said.

Research by Global Property Guide, a United States online property research website, shows Hong Kong is the sixth most expensive city in the world for renting a 1,288 sq ft flat.

Housing allowances paid by employers have also fallen. Another agent who focuses on the expatriate market and asked to remain anonymous said many companies cut allowances for their expatriate employees after the global financial crisis in 2008.

"Most of my clients' rental allowances had fallen from HK$30,000 a month to HK$20,000 a month," he said.

Patrick Chow Moon-kit, head of research at Ricacorp Properties, said: "Tenants who have to renew their lease this year face a 20 to 30 per cent rise in rents."

But while rents in central districts will rise, rents in the New Territories could fall 10 per cent because 5,000 new flats will be completed in the area this year.

"An increasing number of expatriates are relocating to previously unpopular areas. Expatriates who were living at Bel-Air in Cyberport have moved to The Belcher's in Sai Wan and Wan Chai's J Residence and The Zenith, and expatriates from Japan and Korea who used to live in Quarry Bay's Taikoo Shing have moved to Tseung Kwan O," Chow said.

Local agent Janice Chan, who focuses on the Hong Kong Island expatriate market, said many owners were increasing rents by HK$1,000 to HK$2,000 a month.

"Rents will continue to rise since there is no increase in supply in the pipeline. Fewer investors have bought flats for leasing since the government introduced extra stamp duties in February last year," she said.

Another agent who focuses on the expatriate market - and asked to remain anonymous - forecasts a steady increase in central rents.

"It used to be popular to buy flats for leasing but since investors were required to pay extra stamp duties we have fewer flats available for leasing," he said. "At the same time demand for renting is increasing because it is difficult for end users to buy flats under the cooling measures."

Given the demand from expatriates, choice was also limited, said Ricacorp's Chow, who suggested expatriates consider flats at The Merton in Kennedy Town. "The estate provides one-bedroomed flats at asking rents of HK$15,000 a month," he said.

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This article is now closed to comments

cheeky
At the east side of the island, prices have stopped increasing since stamp duties were imposed. Prices for some flats have actually come down by 10-15%. At the same time, similar flats were also quoted at prices during the peak so it is hard to know why some flats are cheaper and some are not. Knowing these agents, won't rule out the statistics or the price tags they put at the window are not real. You will only know the real market when you give a take it or leave it offer.
The same goes for rental. It's stopped climbing but it has not come down in a meaningful way either. If you are lucky you will get 10% discount from what was quoted because the landlord doesn't want the flat left vacant anymore. But I am pretty sure he will try to recoup that the following year knowing it will be harder for you to move out than to pay a 10% hike.
Overall, the housing situation in HK, buy or rent, is just unhealthy. In a normal country you can invite your friends back to your place for dinner or party, that is unthinkable in HK unless you are lucky enough to live in a 2000 sf apartment.
How a place like HK can end up like this? It is as if the leaders have no clue how bad things are. Donald Tsang did not build any government flats for sale for 7 years. Can we blame him when Tung Chee Hwa was blamed for trying to build more flats by flat owners who worried about the valuation of their flats back in 2000s. We are paying the price now.
gimli
The agent either doesn't know his stuff or is misquoted:
'Moving from Bel-Air in Cyberport...to .... Wan Chai's J Residence' because it's cheaper? J Residence is super expensive! Rather the other way round.
tksiow
Fully agree,Wan Chai's J Residence is super expensive.
cbre07
Re the comment in the second to last paragraph. If less apartments are being purchased then would this not lead to increased supply on the rental market unless either vacancy is increasing or flats are being demolished?
I was under the impression a completed residential unit could only be in one of three states;
1) Owner occupied
2) Rented
3) vacant
Therefore should less buyer demand from end users not lead to an increase in supply on the rental market, if not now at some point in the future (assuming owners of properties currently for sale and not selling will avoid letting them sit empty on the market for too long)?
aplucky1
i agree and thought the same when reading this
but consider the source, the highly un-ethical vile Cretan real estate agents, who refuse to give their names for the article-what scum bags they are
mrlcooper
Standard Hong Kong residential broker speak! "Blah, blah, blah, blah*... and this means prices will increase".
*insert any set of circumstances here - new ice age, whatever...
 
 
 
 
 

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