Private home rents seen approaching record levels
Industry researcher expects rental rates to overtake in a year or two the high reached in September 1997
Rental rates in the private residential property market are fast approaching the record levels of 1997, when the city’s real estate market peaked, according to data compiled by leading property broker house Centaline.
Statistics from 73 residential properties across the city show average rental fees climbed to HK$17.4 per square foot in May, up from April’s HK$17.3, another increase for the past 14 consecutive months.
The rents have increased by 18.7 percent in 2009, and 5.5 percent as of May this year.
“Going up by 17.2 percent, the city’s rental (rates) will return to the historic high in September 1997,” said Wong Leung-sing, associate director of research at Centaline.
Hong Kong’s rental rates peaked in September 1997 at HK$20.4 per square foot. HK$17.4 is equivalent to the level in August 2008, before the city’s rental rates started sliding due to the breakout of the global financial crisis. It bottomed out in March 2009, at HK$13.2 per square foot.
“Lessees’ demands are not the main force driving rentals upward, although their ability to pay higher rents and desire to improve the living environment are strengthening as the city’s economy continues to pick up after the economic crisis,” said Wong.
Wong believes Hong Kong’s rental rates no longer reflect the real supply and demand situation – which he said has basically been balanced over the years. The rental fees have become a gauge that mirrors the city’s economic situation. Home price hikes driven by investment purposes have also been fueling the continuing increases in rental rates.
“Rents will eventually surpass the high posted in 1997 – definitely, probably in a year or two,” said Wong, adding that the city’s property prices will also maintain a stable uptrend in the future amid economic rebound and anticipated inflation.
According to another popular home price index compiled by Centaline and the City University of Hong Kong, the city’s home prices rose to a 12-year high this April, also close to the highest level in 1997, despite an increase in the supply of local flats in the first quarter.
The government has been concerned about a potential bubble in the property market due to low interest rates and ample liquidity and initiated a series of measures aimed at curbing speculative activities.
Government figures released earlier this month showed Hong Kong’s residential property sales transactions in May slid 17 percent from the previous month, the lowest this year.
China Daily
(HK Edition 07/16/2010 page3)
http://www.chinadaily.com.cn/hkedition/2010-07/16/content_10113499.htm
No comments yet.