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Apr 24, 2013

How much longer will Hong Kong property rise?


Last Updated: Apr. 24, 2013
MIDLEVELS -
Apartments
COST (US$) YIELD (p.a.) PRICE/SQ.M. (US$)
TO BUY MONTHLY RENT TO BUY MONTHLY RENT
75 sq. m. 1,396,200 3,683 3.17% 18,616 49.11
120 sq. m. 2,479,200 6,198 3.00% 20,660 51.65
175 sq. m. 4,246,550 9,174 2.59% 24,266 52.42
250 sq. m. 7,486,500 14,250 2.28% 29,946 57.00
THE PEAK -
Apartments
200 sq. m. 8,638,400 14,200 1.97% 43,192 71.00
500 sq. m. 26,688,500 37,690 1.69% 53,377 75.38
HONG KONG ISLAND - Apartments
(other luxury areas)
120 sq. m. 2,761,440 6,278 2.73% 23,012 52.32
160 sq. m. 4,455,840 9,347 2.52% 27,849 58,42
200 sq. m. 5,523,400 11,992 2.61% 27,617 59.96
250 sq. m. 8,159,250 16,730 2.46% 32,637 66.92
400 sq. m. 16,109,600 28,132 2.10% 40,274 70.33
NEW TERRITORIES - Apartments
70 sq. m. 705,390 2,702 4.60% 10,077 38.60
120 sq. m. 1,612,080 5,089 3.79% 13,434 42.41
160 sq. m. 3,019,520 7,818 3.11% 18,872 48.86
200 sq. m. 3,613,200 9,908 3.29% 18,066 49.54
350 sq. m. 7,513,450 16,244 2.59% 21,467 46.41
KOWLOON TONG -
Apartments
75 sq. m. 1,135,575 n.a. n.a. 15,141 n.a.
120 sq. m. 2,028,600 5,233 3.10% 16,905 43.61
200 sq. m. 4,214,800 9,074 2.58% 21,074 45.37
Districts researched:
Midlevels and The Peak are in Hong Kong Island.
Hong Kong Island (other areas): Jardines Lookout , Repulse Bay , Tai Tam, Shouson Hill, and Stanley Beach
New Territories: Clearwater Bay, Sai Kung, Discovery Bay, Gold Coast
Source: Global Property Guide Definitions: Data FAQ See also: Update Schedule

A rising tide lifts all boats…Hong Kong’s property market rose an amazing 13.7% (in inflation adjusted terms) during the year to the end of Q2 2013. Yet rental yields are lowish, with gross rental yields of from 2% on the Peak to 4.6% 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.

The latest year’s 13.7% price rise comes after a rise of 3% during the same period in 2012, and an even more amazing 23% during same period the previous year.  One worries how much longer this can continue.

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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