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Hong Kong property
Business

A Four Seasons address for less than a Hong Kong flat’s monthly rent as serviced apartments compete with hotels for guests

  • The industry bottomed out last year and occupancy rates are likely to improve in 2021, according to Knight Frank
  • Promotional rates underscore ongoing cutthroat market rivalry as pandemic drains the city of business travellers and expatriates

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The interior of Nina Hotel Causeway Bay of the Chinachem Group. Photo: Handout
Lam Ka-sing
Hong Kong’s serviced apartment operators are facing another tough year as rents slumped for an eighth straight quarter, with Four Seasons Place – one of the priciest in the city – slashing the starting rent by 27 per cent as the Covid-19 pandemic drains the city of business travellers and expatriates.
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Rents fell by 1.4 per cent in the first quarter, bringing the losses to 24 per cent over the past two years, according to data compiled by Savills. Apartment-like rentals reached the lowest since the first quarter of 2007. Occupancy levels averaged 57 per cent vs from 62.5 per cent on average in 2020, according to industry data.

While many sectors of the city’s economy have suffered from border closures and civil unrest since 2019, the damage to the hospitality industry is worsened by intensifying competition with long-stay incentives offered by hotel operators seeking to survive the city’s worst recession on record.

“Apart from price competition between serviced apartments, operators have to face the threat from cutthroat pricing by hotel long-stay packages, since hotels are desperate to maintain occupancy with zero inbound tourism,” said Simon Smith, regional head of research and consultancy in Asia-Pacific at Savills. “Locals have remained the major demand driver for the market despite more modest budgets.”

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Four Seasons Place, part of the International Finance Centre complex in Central, is pricing its smallest city-facing studio unit measuring 547 sq ft on the lowest floor at a promotional rate of up to HK$40,000 (US$5,151) a month, according to a leasing representative. This works out to about 27 per cent below its published rate of HK$54,600.

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