Rental yields in Hong Kong are very low
Residential Valuation Specialist | April 30, 2018
|Last Updated: Apr. 30, 2018|
|HONG KONG ISLAND - Apartments||COST (US$)||YIELD (p.a.)||PRICE/SQ.M. (US$)|
|TO BUY||MONTHLY RENT||TO BUY||MONTHLY RENT|
|<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.|
|NEW TERRITORIES - Apartments|
|<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 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%. This is due to the continuous rise in Hong Kong´s residential property prices.
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 US$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 3.7 million.
Hong Kong is not a ´typical´ market. How could it be, when Hong Kong is the 2nd most expensive city in the world in which to buy a home? 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.