Hong Kong landlords are slashing rents to attract and retain good tenants, especially in areas where a flurry of new homes will be delivered in the first half of this year, as the city’s unemployment rate rises because of the coronavirus pandemic. Tenants should hunt for bargain rents in areas such as New Territories West, Tseung Kwan O and Kai Tak, where rents were expected to drop further and the landlords were desperate, industry insiders said. As far as lived-in homes elsewhere in the city were concerned, landlords might cut rents for tenants they believe to have good backgrounds or jobs. Some owners might proactively offer their units at cutthroat prices to speed up leasing, said Chris Wong, executive director at Century 21 Sunrise Property Agency. “There will be a large supply of new homes. If they leave the properties vacant, apart from the rent forgone, they will also need to pay high management fees,” Wong said. About 8,750 homes are expected to be delivered in the first half of 2022, in new developments across Hong Kong, according to an estimate by Midland Realty. Some may be delayed because of slower progress in construction and Covid-19 driven delays in deliveries of materials. But this surge in supply could coincide with a rise in unemployment. For instance, Financial Secretary Paul Chan Mo-po on Sunday said that Hong Kong’s unemployment rate for the three months ending in February had risen to 4.5 per cent , its highest level in nearly five months. Projects that are expected to hand over keys to owners in April include The Henley in Kai Tak , which has 883 flats in two phases, and the 503-flat Ocean Marini in Lohas Park . Tuen Mun and nearby Sham Tseng districts will have the most number of new flats at 2,299 units, while Tin Shui Wai district will account for about 1,612 units and Tseung Kwan O district will account for about 1,510 units. The Kai Tak, Ho Man Tin and Hung Hom districts in Kowloon will have a total of about 1,123 new flats. Together with flats listed for renting in new developments completed in late 2021 that are yet to be leased out, the total number of new homes available for renting might exceed 10,000 units in the first half of this year. And rents are already falling. For example, a 702 sq ft flat in Sea to Sky in Lohas Park was leased at HK$20,000 (US$2,554) this month, the lowest rent for such flats since the development’s delivery in late November last year, according to Ricacorp Properties. Rents in Tuen Mun mid this year are expected to be up to 10 per cent below the level seen in early 2022, driven by new supply, said Michelle Lung, senior branch manager at Million Yield Properties. Emerald Bay phase one, which was delivered last year, had cheap listings for small flats at HK$6,800 to HK$7,000 a month, she said. Rents were still falling earlier this year even though leases have been signed continuously since late 2021, because supply was too high, she said. Rents nearby have been dragged down too. Siu Hong Court in Tuen Mun had a flat measuring 493 sq ft leased at just HK$8,800 a month last week, the lowest level in the development this year, for instance. Of the 14,552 listings available for rent on Centaline Property Agency’s website, 424, or 2.9 per cent, HK$10,000 or less, as of Monday morning. Most of them are in New Territories, or are older homes or tiny flats in Kowloon. Elsewhere, the landlords of lived-in homes are also proactively slashing rents to prevent tenants from leaving upon lease expiry. They want to avoid paying extra commission for a new tenant and a rent gap, or having their property go vacant, said Century 21 Sunrise’s Wong. Last week, the owner of a flat in Tierra Verde in Tsing Yi agreed to lease their property at HK$15,000 a month, or 15 per cent below market. “The landlord agreed to rent out the unit at a low price because he found out that the new tenant was the management of a large company,” said Vincent Li, branch manager at Centaline. The tenant “was straightforward and was willing to pay one year’s rent in advance in one go”. The market has not found a bottom yet. The Centa-City Rental Index, which tracks Centaline’s deals in 133 estates, extended a four-month slide in February and hit a nine-month low of 113.75. The index is expected to fall to early 2021 levels in the first half of this year.