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Apr 24, 2013

Hong Kong blasts off into outer space

			Last Updated: Apr. 24, 2013
MIDLEVELS - Apartments	COST (US$)		YIELD (p.a.)	PRICE/SQ.M. (US$)
MIDLEVELS - Apartments	TO BUY	MONTHLY RENT	YIELD (p.a.)	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 19% during the year to the end of Q1 2011, the highest property price rise in the world, after a yet more amazing 27% during same period the previous year, also a record!

As Hong Kong’s residential prices have surged, rents have risen too. If you want to live in Mid-Levels you’re going to have to pay US$10,000 a month. 350 square metres – real style – will cost you US$300,000 per year. You’ll pay US$4,000 per month for 120 square metres of faceless horror in the New Territories!

Yet rental yields are extremely low, with gross rental yields of from 2% on the Peak to 3.7% 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.

Of course, buyers are hoping that values will rise even more. Which, given low interest rates and a bubbling economy, could well happen.

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.

Hong Kong - more data and information

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