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Apr 30, 2018

Rental yields in Hong Kong are very low

Last Updated: Apr. 30, 2018
HONG KONG ISLAND - Apartments COST (€) YIELD (p.a.) PRICE/SQ.M. (€)
<40 sq. m. 901,326 2,449 3.26% 22,533 61.23
55 sq. m. 1,204,868 2,989 2.98% 21,907 54.34
85 sq. m. 2,087,257 4,663 2.68% 24,556 54.86
130 sq. m. 3,714,113 7,267 2.35% 28,570 55.90
>160 sq. m. 6,122,688 8,861 1.74% 38,267 55.38
KOWLOON - Apartments
<40 sq. m. 770,390 2,012 3.13% 19,260 50.31
55 sq. m. 1,048,054 2,681 3.07% 19,056 48.75
85 sq. m. 1,815,559 4,188 2.77% 21,360 49.27
130 sq. m. 3,590,946 6,845 2.29% 27,623 52.65
>160 sq. m. 5,979,334 n.a. n.a. 37,371 n.a.
<40 sq. m. 694,824 1,581 2.73% 17,371 39.52
55 sq. m. 810,524 1,880 2.78% 14,737 34.19
85 sq. m. 1,395,880 2,873 2.47% 16,422 33.80
130 sq. m. 1,799,478 4,631 3.09% 13,842 35.62
>160 sq. m. 1,488,614 5,387 4.34% 9,304 33.67
All yields are gross - i.e., before taxes, repair costs, ground rents, estate agents fees, and any other costs. Net yields (what you´ll really earn) are typically around 1.5% to 2% lower.
Source: *Hong Kong Rating and Valuation Department **Midland Realty 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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