Residential Leasing Savills Research
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Hong Kong – January 2021 MARKET IN MINUTES Residential Leasing Savills Research Savills team Please contact us for further information RESIDENTIAL SERVICES Aradhana Khemaney Head of Residential Services +852 2842 4491 [email protected] Hatty Ng Director +852 2378 8631 [email protected] Sdever Li Director Q4 sees tighter budgets and less activity +852 2842 4551 Landlords are generally adapting to lower budgets while occupancy rates have [email protected] held up well despite the downturn. RESEARCH Simon Smith • Hong Kong Island, Kowloon and the New Territories • Both luxury residential rents and townhouse rents are Senior Director recorded annual rental declines of 11.8%, 11.1% and 11.8% expected to continue to slip in the fi rst half of 2021 while we Asia Pacifi c respectively in 2020. could see rents stabilise over the second half, vaccine and +852 2842 4573 travel dependent. [email protected] • Landlords have been more willing to accept rent cuts Jimmy Wong requested by tenants rather than face the risk of lengthy Assistant Manager voids. +852 2842 4287 “ The market remains locked [email protected] • Discovery Bay (-15.4%) recorded the largest rental fall up with few new arrivals and Savills plc Savills is a leading global real across all districts in 2020 largely because the district is estate service provider listed on heavily exposed to airline staff . a trickle of leavers, a situation the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled likely to persist into the fi rst growth. It is a company that leads • Townhouse rents recorded falls of 3.1% and 10.5% in rather than follows, and now has over 600 offi ces and associates Q4/2020 and the whole 2020 respectively. quarter of this year.” throughout the Americas, Europe, Asia Pacifi c, Africa and the Middle SIMON SMITH, SAVILLS RESEARCH East. This report is for general informative purposes only. It may • Serviced apartments typically off ered rental cuts of 10% not be published, reproduced or to 20% to increase occupancy levels. More tenants are quoted in part or in whole, nor may it be used as a basis for any asking for more fl exible lease terms given concerns over job contract, prospectus, agreement or other document without prior security. consent. Whilst every eff ort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research. savills.com.hk/insight-and-opinion/ 1 Residential Leasing MARKET COMMENTARY In the last quarter of 2020, all districts GRAPH 1: Hong Kong Island Luxury Rental Indices By District, Q1/2003 to Q4/2020 In a year during which most businesses on Hong Kong Island recorded larger rental have struggled and unemployment has falls compared with the previous quarter. Mid-Levels Pokfulam The Peak Happy Valley/Jardine's Lookout risen above 6% (its highest level since Hong Kong Island rents fell by 3.1% in Southside/Shouson Hill 2009) luxury apartment rents fell by 11.5% Q4/2020. Southside/Shouson Hill registered 300 over 2020 as a whole and by 2.6% during the largest rental decline on Hong Kong 250 the fourth quarter. As corporates have cut Island, with rents dropping by 4.2% over the salaries and housing allowances, tenants quarter, followed by The Peak (-3.8%) and 200 have had every incentive to negotiate Happy Valley / Jardine’s Lookout (-3.5%). rental terms and generally landlords have Luxury apartment rents in Kowloon and the 150 been willing to accept cuts rather than New Territories fell by 1.5% and 3.0%. Ho face the risk of prolonged vacancy. Travel Man Tin/Kowloon Tong (+5.2%) recorded Q1/2003=100 100 restrictions have also slowed the fl ow of the largest rental decrease in Kowloon and new arrivals to a dribble and activity has the New Territories after the active school 50 been mostly locally driven. Looking ahead, season in the third quarter. the fi rst half is likely to see further falls in 0 Given the well-publicized woes of the Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 rents while the second half may see greater airline industry which saw Cathay lay off 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 stability. 6,000 employees including 550 pilots, Source Savills Research & Consultancy Overall the market was fairly fl at in the Discovery Bay was Hong Kong’s worst fi nal quarter of 2020, in terms of both rents hit rental market, with apartment rents and volumes, and is likely to remain so until down by 15.4% over the year. Layoff s were GRAPH 2: Kowloon and New Territories Luxury Rental borders reopen. We could see further minor supplemented by reduced terms of service Indices By District, Q1/2003 to Q4/2020 seasonal falls in the fi rst quarter of this year and lower housing allowances and landlords with a pick up during the traditionally active Tsim Sha Tsui / Hung Hom Kowloon Tong have been faced with little choice but to Discovery Bay Sai Kung April to October period. To what extent the Shatin / Tai Po refl ect the cuts. A typical allowance was 200 market returns to normal will very much slashed from HK$100,000 to HK$70,000 depend of the progress of vaccinations and 180 per month. the lifting of travel restrictions. The least-worst performer of the year 160 Active budget bands in the fourth was Sai Kung which saw a 7.5% fall in rents. quarter include pilots (HK$70,000- 140 Tenants in this rural district have chosen HK$80,000), lawyers (HK$80,000 – the lifestyle and are generally reluctant to 120 HK$100,000), French bankers (HK$90,000 move away from the greenery, the sea views Q1/2003 = 100 Q1/2003 – HK$100,000) and IT (HK$40,000 100 – HK$50,000). While good quality stock and the lower development density. As a 80 is seeing little vacancy, houses of over more mature market, Sai Kung also typically HK$100,000 per month are struggling to sees less new development and this has also 60 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 fi nd tenants. The upper Peak is also quiet helped to support rents. New roads, the bane 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 with many put off by the cost, the climate, of everyone’s life over the past year or so, Source Savills Research & Consultancy and the dearth of schools. should complete in 2021 improving access TABLE 1: Savills Residential Rental Indices, Q3/2020 TABLE 2: Mid-Levels, The Peak and Southside Transactions, Q4/2020 vs Q4/2020 SALEABLE HK$ PER MONTH UNIT HK$ PER SQ FT Q3/2020 (%) Q4/2020 (%) DISTRICT ADDRESS AREA (INCL. MGT. & TYPE SALEABLE (SQ FT) RATES) Luxury Apartments - Branksome -0.4 -3.1 Mid-Levels Apartment 2,279 160,000 70 Hong Kong Island Grande Tregunter Luxury Apartments - Mid-Levels Apartment 2,887 120,000 42 +1.2 -1.5 Towers Kowloon The Mount The Peak House 2,724 245,000 90 Luxury Apartments - Austin -1.7 -3.0 New Territories Interocean The Peak Apartment 2,665 228,000 86 Court Townhouses - 0.8 -3.1 8 Deep Water Southside Apartment 3,302 220,000 67 Bay Drive Serviced Apartments -0.5 -2.5 Southside House The Carmina 2,075 112,000 54 Source Savills Research & Consultancy Source Savills Research & Consultancy savills.com.hk/insight-and-opinion/ 2 Residential Leasing GRAPH 3: Townhouse Rental Indices By District, TABLE 3: Kowloon Transactions Q4/2020 Q1/2003 to Q4/2020 SALEABLE HK$ PER MONTH UNIT HK$ PER SQ FT Peak Southside DISTRICT ADDRESS AREA (INCL. MGT. & TYPE SALEABLE 250 (SQ FT) RATES) Tsim Sha The Apartment 1,051 58,000 55 Tsui Harbourside 200 Tsim Sha The Apartment 1,015 40,800 40 Tsui Harbourside 150 Kowloon Apartment The Cullinan 1,301 80,000 61 Station Kowloon 100 Apartment The Cullinan 1,262 67,000 53 Station Q1/2003 =100 Kowloon Apartment Grand Austin 928 40,000 43 50 Station Kowloon Apartment The Waterfront 934 35,000 37 Station 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Kowloon Apartment Grand Austin 1,127 58,000 51 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Station Source Savills Research & Consultancy Source Savills Research & Consultancy GRAPH 4: Serviced Apartment Rental Indices By TABLE 4: New Territories Transactions, Q4/2020 Type, Q1/2003 to Q4/2020 SALEABLE HK$ PER MONTH Hotel-like Apartment-like UNIT HK$ PER SQ FT DISTRICT ADDRESS AREA (INCL. MGT. & TYPE SALEABLE 200 (SQ FT) RATES) 180 Silver Crest Sai Kung House 1,890 70,000 37 Villa 160 140 Sai Kung Apartment Habitat 1,561 83,000 53 120 Discovery House Headland Drive 2,094 100,000 48 100 Bay 80 Discovery House Bijou Hamlet 1,556 85,000 55 Q1/2003 = 100 Q1/2003 Bay 60 Discovery Apartment Poggibonsi 1,200 56,000 47 40 Bay 20 Source Savills Research & Consultancy 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source Savills Research & Consultancy to the area, especially on weekends when traffi c is SERVICED APARTMENT MARKET cases we have heard of 50% reductions.