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May 31, 2017

Rental yields in Hong Kong are very low


Last Updated: May. 31, 2017
HONG KONG ISLAND - Apartments PRICE/SQ.M. (US$) YIELD (p.a.) PRICE/SQ.FT. (US$)
TO BUY MONTHLY RENT TO BUY MONTHLY RENT
Mid-Levels East 19,480 n.a. n.a. 1,810 n.a.
Mid-Levels West 25,215 n.a. n.a. 2,342 n.a.
Jardines Lookout 32,839 n.a. n.a. 3,051 n.a.
Repulse Bay 49,634 n.a. n.a. 4,586 n.a.
Shouson Hill 51,035 n.a. n.a. 4,741 n.a.
Tai Tam 31,570 n.a. n.a. 2,933 n.a
KOWLOON TONG -
Apartments
21,382 n.a. n.a. 1,986 n.a.
NEW TERRITORIES - Apartments
Clearwater Bay 16,690 n.a. n.a. 1,551 n.a.
Gold Coast 13,657 n.a. n.a. 1,269 n.a.
Sai Kung 18,045 n.a. n.a. 1,676 n.a.

Source: transactions.gohome.com.hk Definitions: Data FAQ See also: Update Schedule
The prices are based on the actual sold price that has transpired on April 2017.


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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