Hong Kong rents for well-off expats ‘most expensive in the world’

Three-bedroom homes in areas popular with rich expats cost twice as much to rent as those in Singapore, study finds. But gap is shrinking

PUBLISHED : Thursday, 06 March, 2014, 5:55pm
UPDATED : Friday, 07 March, 2014, 5:16pm

Rent on high-end flats in Hong Kong remains more expensive than in any other city worldwide - double the level of Singapore - despite a slight fall in the past year, an annual study found.

The survey by human resources consultancy ECA International found that the average monthly rent for three-bedroom flats in areas popular with expats in senior jobs, such as The Peak, Discovery Bay and Sha Tin, was US$11,444 per month last year.

While the price was down 1 per cent on 2012 - a factor attributed by researchers to government efforts to cool the property market and a trend for companies to send lower-ranking staff to the city - rents remained 23.5 per cent higher than in the second priciest city, Moscow.

It is the ninth consecutive year Hong Kong has topped the table, and the 13th time it has ranked most expensive since the survey of rents for expats began in 1996.

And it came just days after regional rival Singapore was named the world's most expensive city in another survey by the Economist Intelligence Unit. Hong Kong ranked 13th in that study, which took into account the cost of 160 products and services but excluded housing costs.

But Lee Quane, ECA's regional director for Asia, said high rents had little impact on Hong Kong's competitiveness. And the difference in rental costs between Hong Kong and Singapore was narrowing, though the gap with Tokyo was widening fast.

Four years ago, rents in Tokyo were 6 per cent lower than in Hong Kong. This year they were 55 per cent lower. The Japanese capital has seen rents fall in relative terms partly as a result of the weakening of the yen against the US dollar, the currency in which the survey is conducted. Rents in Mumbai were also down due to the weak rupee.

In Singapore, rent for a three-bedroom flat was US$5,630, while Shanghai ranked ninth globally and fourth in Asia, with an average rent of US$5,124.

Quane believed that the fall in Hong Kong rents was in part a reaction to a series of government measures to cool the property market.

The measures, including higher taxes for people who sell a flat soon after buying it and for corporations and non-Hong Kong residents buying homes, encouraged owners to rent out their properties rather than sell them, Quane said.

He also said companies were sending more junior staff to Hong Kong. Such employees were more likely to look for flats in less expensive locations, such as Tsim Sha Tsui.

Quane said international companies had long accepted that rents in Hong Kong were high. He said most companies that sent staff to the city were in sectors such as finance and law, and the alternative was likely to be expensive cities such as London, Singapore and Tokyo.

"Hong Kong was significantly more expensive than Singapore in 2007, but now the gap is much less," he said, noting that other costs of employing someone in Singapore, including medical insurance, could be higher.

The findings echoed comments by property agents locally. Anne-Marie Sage of property consultancy Jones Lang LaSalle, said last month that luxury residential rents dropped 3.3 per cent last year.

Globally, average rents rose 2 per cent, while rents in Asia were down 1 per cent.