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Apr 09, 2016

Rental yields in Hong Kong are very low


Last Updated: Apr. 09, 2016
MIDLEVELS -
Apartments
COST (US$) YIELD (p.a.) PRICE/SQ.M. (US$)
TO BUY MONTHLY RENT TO BUY MONTHLY RENT
120 sq. m. 3,066,120 7,024 2.75% 25,551 58.53
200 sq. m. 4,999,800 10,912 2.62% 24,999 54.56
THE PEAK -
Apartments
200 sq. m. n.a. 11,804 n.a. n.a. 59.02
HONG KONG ISLAND - Apartments
120 sq. m. 3,552,000 6,755 2.28% 29,600 56.29
200 sq. m. 6,120,200 n.a. n.a. 30,601 n.a.
NEW TERRITORIES - Apartments
120 sq. m. 2,881,680 6,770 2.82% 24,014 56.42
200 sq. m. 9,849,840 15,655 1.91% 35,178 55.91
KOWLOON TONG -
Apartments
120 sq. m. 1,893,720 7,271 4.61% 15,781 60.59
200 sq. m. 4,167,000 11,314 3.26% 20,835 56.57
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

Hong Kong´s property market is in a select band of cities where gross rental yields - the percentage return to owners on renting out their property - is only just above 2%. Effectively, this means that landlords are unlikely to make any profit on their apartments, once empties, administration costs, cleaning and repairs, and other costs are taken into account.  Or, if not nothing, then very little. Other such cities are Monaco and Taipei.

That´s not to say rents are low.  You will pay USD 7,000 per month for a 120 square metre (sq. m.) apartment in Mid Levels.  But if you want to buy it, it is likely to cost you USD 3 million.

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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