Shed a tear for the top echelon of expats in Hong Kong’s finance and banking sector.
The housing allowances fat enough to rent a 4,000 square foot harbor-view home on the Peak or a townhouse in Repulse Bay for HK$300,000 (US$38,650) a month are being slashed or eliminated, Bloomberg reports.
Expatriate executives are having to give up marble jacuzzis, private gardens and killer views in exchange for something humbler.
And that’s putting a dent in the luxury rental market.
“We are seeing more downsizing,” said Maureen Mills, managing director of Executive Homes Hong Kong Ltd., a boutique real estate agency that works with law firms.
“Partners used to have company leases and were happy to spend HK$150,000. Now with cash packages, they are more comfortable at HK$80,000 to HK$100,000.”
In the first quarter of this year, only 7 percent of Jones Lang LaSalle Inc.’s expat property clients in Hong Kong were given monthly rental budgets of more than HK$100,000, less than a quarter of the 31 percent in 2012.
Now, 54 percent of clients make do with less than HK$30,000 a month — enough for about two small bedrooms squished into 550 square feet in Central — compared with 11 percent four years ago.
The number of finance clients with corporate packages moving to Hong Kong through JLL has halved, said Stella Abraham, head of the firm’s Hong Kong residential leasing and relocation services for companies including US banking giants Citigroup Inc. and JPMorgan Chase & Co.
The downsizing trend is occurring against the backdrop of Hong Kong’s biggest property correction since 2003.
Five years ago, when expat housing allowances were paid on a “use it or lose it” basis, agents had plenty of clients willing to spend as much as HK$300,000 a month.
Now company-paid leases are out, and while salaries are adjusted to partly offset the missing housing allowances, employees no longer have an incentive to spend a king’s ransom on rent.
Now they are more likely to content themselves with a two-bedroom, 1,320 sq ft apartment at the Hong Kong Parkview at HK$88,000 a month.
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