Rents in luxury homes rise 1.4% in Q2

This is the first time high-end residential rents saw an increase since 2019.

Luxury residential rents in Hong Kong rose 1.4% in the second quarter of the year, the first time it increased since the third quarter of 2019.

JLL reported the demand for luxury homes rebounded amidst the stronger-than-expected recovery of Hong Kong’s recovery.

Mid-levels recorded the highest rental growth of 2% amongst the major submarkets, which JLL linked largely on limited availability.

Lower rents today compared to late 2019 also induced tenants to upgrade to larger-sized units, JLL noted.

“With rents having declined 16% between the third quarter of 2019 and the first quarter of 2021, tenants took advantage of the more affordable rental market to upgrade from medium- to large-sized units,” Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL in Hong Kong, said.

“This was reflected in the drop in vacancy rates according to the latest figure from the Rating and Valuation Department.”

Leasing demand for luxury residential properties have over the years been linked to expatriates in Hong Kong, but the restrictions amidst the pandemic limited their entry in the first half of the year.

In line with this, the luxury rental market was primarily supported by the current pool of residents in Hong Kong.

Despite limits, viewing activities improved when compared to the same period in 2020, whilst leasing momentum also picked up steadily as social distancing measures were relaxed.

"As the work-from-home arrangement becomes popular, it has probably prompted some tenants to upgrade their dwellings to accommodate certain work-related needs, resulting in higher demand for large size units,” Nelson Wong, Head of Research at JLL in Greater China, said.

JLL added expatriate arrivals will remain limited in the short term, but leasing enquiries are expected in the next quarter as the summer is traditionally a home search season.