Which HK district is most defensive in home rental?

Ben Kwok March 29, 2023 10:35

Yes, the border is open. Yet, the business is not back.

That has been reflected in the residential rental market in Hong Kong, where 90 per cent was below the pre-pandemic level, according to Centanet, a leading property agency in town.

Surprisingly, homes in Hong Kong Island recorded the largest decline among the 35 major housing estates with the middle-class favourite Taikooshing down nearly 20 per cent in February, as compared to December 2019.

The invincible Swire signature estate with over 50 years of history is not immune to the local brain drain and expatriates departure during the pandemic.

Although homes in Hong Kong Island are generally regarded as more defensive than those in Kowloon or New Territories, the Centanet data in the past three years showed otherwise.

In fact, the three major housing estates with rental staying above the pre-pandemic levels are D park in Tsuen Wan, Fanling Centre and Flora Plaza, also in Fanling. In particular, Fanling Centre topped all estates with a 6.6 per cent price increase to about HK$29.6 per square foot.

It goes without saying the Tuen-Ma line and the East Rail (which made travel from Shatin Station (20 minutes) faster than Chai Wan (23 minutes) to Admiralty) provided strong support for these rail-friendly estates.

The case for buying a property for better yield has not been true in the past year.

According to Centanet, in terms of rental yield, 70 per cent of the local major estates were below three per cent, less than the three-month fixed deposit rate.
For example, average rental at Taikooshing was about HK$33.9 per square foot in February, down from HK$42.3 in December 2019. The current yield was about 2.3, down 0.3 percentage points in the same period.

Mind you, there are about 230 rental units available in the 61-storey Taikooshing starting as low as $17,000 monthly rental.

But things could look up, according to property agencies, with more mainland students and talents under the immigration programme coming over, which should mitigate the second wave of emigration to Britain and other countries this year.

In retrospect, the Centa-City Leading index peaked in September 2021 at 191.66 and reached a trough of 155.47 in December 2022 before ending at 166.5 in February 2023.

The notion of getting rich through property investments do not particularly work in the past three years and the future is still anybody’s guess given the choppy macro environment.

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Ben Kwok

EJ Insight writer