Home rents in Hong Kong continue to fall as landlords concede more yields amid recession

Index of rents for larger homes measuring 160 square metre or above fell 1.3 per cent in July, to its lowest level since August 2010

Average rental yields for larger homes hit a record low of 1.8 per cent in July, joining a slump in smaller flats, according to official statistics

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Generic view of high rises at the Wong Tai Sin district, east of the Kowloon Peninsula in Hong Kong. Photo: Nora Tam

Published: 7:15am, 9 Sep 2020Updated: 7:15am, 9 Sep 2020

Home rents in Hong Kong have continued to fall amid the city’s deepening recession, with leases for the largest category of houses or flats hitting the lowest in almost 10 years.

The index of rents for residential property measuring 160 square metre (1,722 sq ft) or above fell 1.3 per cent in July, according to the latest data from the Rating and Valuation Department. The decline pushed the gauge to the lowest level since August 2010.

“The current real estate market is very abnormal,” said Thomas Lam, executive director at Knight Frank. “While residential property prices still remain at high levels, rents have kept adjusting downward due to the economic downturn and the high unemployment rate.”

Hong Kong’s economy has shrunk for four straight quarters through June in its worst recession on record as the Covid-19 pandemic pummeled industries. The slump in rents has continued to erode yields on all five categories of homes, against the city’s 0.2 per cent current normalised inflation rate.

The Hong Kong Monetary Authority last week asked banks to extend their loan repayment holidays for small businesses until April 2021 to help the city’s struggling retail, property and service industries overcome the crisis and cash crunch.

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