A slowdown in expatriate arrivals and the global trend of cutting employee numbers to streamline operations will put pressure on the luxury residential sector. Multinational corporations' tightening control of operational costs amid the slackening economic growth in the United States could weaken the leasing demand of luxury homes in Hong Kong, according to property consultants. The prolonged negative market sentiment would probably adversely affect the luxury residential leasing sector as 60 per cent of tenants were overseas contracted staff, estate agents said. Colliers Jardine residential leasing and international properties executive director Linda Robinson said the company had seen a slowdown of people coming into Hong Kong which was believed to be directly affected by the deterioration of the US economy. International corporations were more cautious in recruiting manpower than before, especially senior staff, she said. Given the market uncertainties, 'we have increasingly seen people taking short-term leases of six months for furnished apartments', said Ms Robinson. Major corporations also were considering paying a lump-sum amount of accommodation allowance to their employees in an attempt to save operational costs, she said. Ms Robinson believed the pressure on the leasing market would become obvious if the unfavourable sentiment persisted, but there was no significant impact on the sector at the moment. However, a new group of potential tenants from manufacturing companies was coming to Hong Kong to tap business opportunities from China's entry into the World Trade Organisation. AG Wilkinson & Associates residential supervisor Aplas Hin said large corporations had cut their housing allowances to senior executives. They now preferred to hire two executives with monthly housing allowances of HK$30,000 to HK$40,000 each, instead of offering HK$100,000 accommodation for one employee, she said. This trend would hit the top end of the residential leasing sector, Ms Hin said. Landlords had opted to reduce rental to lure tenants. Whether the slowdown in the US economy and the weakened stock-market performance would force corporations to further cut their budgets for accommodation remained uncertain as summer was the peak season for expatriate arrivals, said Ms Hin. By that time, the impact on the sector would be clear. The renovation of Bamboo Grove in Kennedy Road, which needed about 10 months to complete, might force some existing tenants to look for new accommodation to avoid disturbances from the construction work. Most would look for similar accommodation at between HK$50,000 and HK$80,000 per month, she said. CB Richard Ellis residential services director Jan McNally noted that multinational corporations were seriously looking to reassess their budgets for housing in view of a rising trend in luxury rentals. However, she remained positive about the market because of the tight supply of luxury homes on offer at monthly rentals ranging between HK$55,000 and HK$85,000. Ms McNally expected to see the rentals of luxury homes increase 10 per cent to 15 per cent this year.
