Prominent real estate advisor Savills pointed out a slight cooling down in residential rental growth in Q4, while luxury apartments and townhouses outperformed in 2018 recording 8% and 10% Y-o-Y rises respectively (compared with Savills’ forecast growth of 0% to 5%).
Prominent real estate advisor Savills pointed out a slight cooling down in residential rental growth in Q4, while luxury apartments and townhouses outperformed in 2018 recording 8% and 10% Y-o-Y rises respectively (compared with Savills’ forecast growth of 0% to 5%). In addition, improved connectivity stimulated activity in West Kowloon and Tung Chung, while the island market saw a dip in traditional up-scale residential neighbourhoods such as Happy Valley and Mid-Levels.
The luxury residential leasing market ground to a standstill in Q4 after two years of robust growth. In particular, luxury apartment rents on overall Hong Kong Island remained unchanged in Q4, while rents in Kowloon and the New Territories edged up by 1.0% and 0.5% respectively.
Despite rising over the year as a whole, the townhouse market recorded a minor 0.2% fall in rents during Q4, the first fall since Q3/2017. Scarcity, especially on Hong Kong Island, is expected to underpin rents in 2019, however. Thanks to their improving quality and traditional flexibility, serviced apartments enjoyed a 1.3% rental rise over Q4.
West Kowloon, home to the newly opened High-Speed Rail Link terminal and a host of luxury apartments, will remain a hotspot for local and PRC tenants; Tung Chung, which is conveniently located close to the airport and the HK-Zhuhai-Macau Bridge, is expected to double its population to over 268,000 in the next decade under the new town extension plan. Similarly, Shatin/Tai Po rents increased by 3.3% during Q4, remaining a popular location thanks to the Science Park combined with strong transport links to both the CBD and the PRC border.
By contrast, Happy Valley/Jardine’s Lookout rents dipped marginally at year end by -1.4% as did rents in Mid-Levels (-0.2%) and Pokfulam (-0.6%). In such areas with little new development, and lacking strong MTR connectivity, turnover is relatively low and renewal rates are high.
Mr. Simon Smith, Senior Director, Research & Consultancy commented: “Rental growth ended the year on a muted note with landlords and tenants often preferring to renew rather than face the cost of relocation. Given the exceptionally tight availability of townhouses, we expect rents to increase by 5 to 10% in 2019. For prime apartments, the rise should be between 0 and 5%.”
Ms. Edina Wong, Senior Director, Residential Services said: “Well-connected estates are gaining in popularity as new rail and bridge projects bring Hong Kong within the ‘one-hour living circle’. Q1/2019 is expected to see a boost in rents compared to both the previous quarter and Q1/2018.”