Hong Kong’s home rental market faces tough fourth quarter as recession makes redundancies more likely

With many companies reliant on government handouts to stay afloat, more redundancies are likely in the next six months, which will dent local housing demand, says Savills

Landlords have been trying to boost demand by offering incentives other than direct reductions in rent, according to property agents

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An aerial view of Central. Photo: Roy Issa

Published: 8:30am, 5 Oct 2020Updated: 9:51am, 5 Oct 2020

Hong Kong’s residential leasing market will be under pressure in the last three months of this year as the traditional low season coincides with the worst recession in decades, property agents said.

With many companies reliant on government handouts to stay afloat, more redundancies are likely in the next six months with obvious negative implications for local housing demand, according to Savills.

“The rental market still seems precariously balanced as tenants and landlords face uncertain prospects,” said Simon Smith, senior director, research and consultancy, at Savills. “We expect the final quarter of 2020 to present further challenges.”

The official rental index in August was down 9.2 per cent from its peak a year earlier, according to data from the government’s Rating and Valuation Department. Monthly rents for apartments have been dropping steadily.

A flat measuring 551 sq ft with three bedrooms at Kingswood Villas in Tin Shui Wai was leased for HK$10,000 (US$1,290), or HK$18.1 per sq ft, last week, according to Jerry Tse, senior branch manager at Many Wells Property Agent. That compares with the usual HK$10,500 to HK$13,500 monthly rent for flats in that area.

A tiny apartment at Ava 61 in Cheung Sha Wan was leased for just HK$8,000 last month, 12.5 per cent lower than the market rate, said Ray Ip, a marketing manager at Hong Kong Property Services (Agency).

Landlords have been trying to boost demand by offering incentives other than direct reductions in rent, agents said.