IT’S ONE OF HONG KONG’S biggest mysteries: After a rocky patch, the city’s legendary home prices are creeping up again–yet rents are falling, sometimes by thousands of dollars a month. How come?
The answer comes from property-watchers at the big real estate chains. Two years of trouble, first from the anti-China protests, and then from Covid, have harmed the poor in Hong Kong, but in recent months, not everyone has suffered.
The middle and upper classes have found themselves hundreds of thousands of dollars richer from a whole year of zero hotel, travel and holiday costs. As a result, the middle and upper classes are abandoning the rental market to pile into the owners’ market.
As they step away from rented accommodation, prices are falling. But as they gather around the shopwindows of real estate sales offices, purchase prices are climbing.
There are other factors too. “If you are in the rental market, you sign up for one flat only, but in a rising market, purchasers would rather have more than one,” says an Admiralty-based businessman who follows the market.
What does the directional discrepancy mean for ordinary people?
For owners: Property values are likely to rise, so that’s good news for the roughly 50 per cent of Hong Kong people who live in self-owned homes, and have been worrying about the value of their apartments.
For renters: The rental market is going through a tough period, so renters may like to take advantage and try to get themselves locked into lower-priced contracts if they can.
FOUR PROPERTY-RELATED OBSERVATIONS
1)One buyer recently spent HK$160 million purchasing a pair of adjacent Mid-Levels flats to turn into a single mega-apartment, we heard from readers living nearby.
The 56-year-old flats at Monte Villa Rosa are 2,000 to 3,000 sq ft, so the resulting double apartment will be in the region of 6,600 sq ft.
By Hong Kong standards, that’s not a flat: it’s a small town!
2)Property salespeople are pointing out that the strength of the Hong Kong real estate market has always been credited to investments from tycoons in the mainland.
But after a year in which few mainlanders have been allowed into the city, the lack of a price crash means that Hong Kong people themselves do underpin the market themselves to a significant extent.
3)ONE apartment in a Hong Kong block, at 21 Borrett Road, just sold for HK$459.4 million, which is about US$60 million.
That makes it the most expensive apartment in the whole of Asia – beating anything even in Tokyo.
For the sake of comparison, the price of that Hong Kong flat by itself is the same as an entire island in the Maldives WITH ITS OWN AIRPORT.
4)The very comfortable Regal Riverside hotel in Shatin is offering a month’s stay for as little as HK$8,800, which is surely less than many people pay for their rent or mortgages.
But what’s really amazing is that it’s the same price that a Friday writer paid when he stayed there with his wife for a month more than 25 years ago.