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Apr 15, 2014

Hong Kong's residential property market is unlikely to see big price rises


Last Updated: Apr. 15, 2013
MIDLEVELS -
Apartments
COST (US$) YIELD (p.a.) PRICE/SQ.M. (US$)
TO BUY MONTHLY RENT TO BUY MONTHLY RENT
75 sq. m. 1,798,800 n.a. n.a. 23,984 n.a.
120 sq. m. 2,737,680 6,431 2.82% 22,814 53.59
175 sq. m. 4,649,575 9,525 2.46% 26,569 54.43
250 sq. m. 7,807,250 13,790 2.12% 31,229 55.16
THE PEAK -
Apartments
200 sq. m. 8,572,600 12,500 1,75% 42,863 62.50
500 sq. m. 13,761,650 22,040 1.92% 39,319 62.97
HONG KONG ISLAND - Apartments
75 sq. m. 1,911,600 4,673 2.93% 25,488 62.30
120 sq. m. 3,010,680 6,493 2.59% 25,089 54.11
175 sq. m. 4,940,250 10,029 2.44% 28,230 57.31
300 sq. m. 9,880,800 18,141 2.20% 32,936 60.47
NEW TERRITORIES - Apartments
75 sq. m. 811,350 2,711 4.01% 10,818 36.14
120 sq. m. 1,644,960 4,368 3.19% 13,708 36.40
200 sq. m. 3,086,400 9,048 3.52% 15,432 45.24
KOWLOON TONG -
Apartments
75 sq. m. 1,144,275 3,242 3.40% 15,257 43.22
120 sq. m. 2,042,280 5,110 3.00% 17,019 42.58
200 sq. m. 4,840,400 9,138 2.27% 24,202 45.69
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

The mood in Hong Kong´s property market has changed substantially since the year 2012, a bumper year for price rises.  During the year to February 2013 prices rose no less than 30.58% (25.09% adjusted for inflation).  From then the market began to slow.  Over the past year to May prices have risen marginally in nominal terms. But in inflation-adjusted terms there has been a slight decline over the past year in residential property prices.

Rental yields are low. In Hong Kong gross rental yields range from 2% on the Peak, to around 4% for a small New Territories apartment. iven 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.

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.

Round trip transaction costs are high for foreign buyers in Hong Kong (though the surcharge is unlikely to be permanent). See our  Property transaction costs analysis for Hong Kong and  Property transaction costs in Hong Kong, compared to the rest of Asia.






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