Hong Kong

A rising tide lifts all boats…Hong Kong’s property market rose an amazing 19% during the year to the end of Q1 2011, the highest property price rise in the world, after a yet more amazing 27% during same period the previous year, also a record!

As Hong Kong’s residential prices have surged, rents have risen too.  If you want to live in Mid-Levels you’re going to have to pay US$10,000 a month.  350 square metres – real style – will cost you US$300,000 per year.   You’ll pay US$4,000 per month for 120 square metres of faceless horror in the New Territories!

Yet rental yields are extremely low, with gross rental yields of from 2% on the Peak to 3.7% for a small New Territories apartment. Given that the Global Property Guide’s figures are for gross rental yields, i.e., do not make any allowance for periods when the apartment is vacant, for legal costs, administration costs, cleaning and repairs, rental taxes, property taxes, and other taxes, etc, it is safe to say that landlords of high-end apartments in Hong Kong earn very little on their apartments.

Of course, buyers are hoping that values will rise even more.  Which, given low interest rates and a bubbling economy, could well happen.

Hong Kong is not a ‘typical’ market. It is a place where the rich choose to park assets in the form of apartments, as part of a diversified asset-safeguard strategy - like Monaco and Singapore.  Such markets typically have lower rental yields than more ‘normal’ housing markets.

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