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In China, the increase in Covid-19 cases has sent some cities into lockdown. There will be many consequences, especially for real estate.
In Hong Kong, analysts are predicting luxury home rents will fall by up to 15% as expatriates leave to escape the country’s zero Covid policy.
Indeed, in the first quarter of 2022, rents for high-end houses and flats fell between 2.6% and 4%, with the Kowloon and New Territories areas seeing the biggest drops, according to property consultancy Savills.
Wave of expatriate departures
The decline seen could have been worse but many landlords refrained from accepting lower offers. “The luxury residential rental market was very quiet in the first quarter as expats faced even more disruption to their personal and professional lives after a fifth wave of Covid-19s hit the city and the government responded with a series of exceptionally tough measures,” according to the Savills report.
Victoria Allan, founder and managing director of Habitat Property, which caters mainly to expats, says many tenants were leaving before their tenancy expired. “We are seeing a record number of lease breaks in the market and we expect rents to fall by up to 15%,” before adding, “I think (the market) will continue to soften until it is easier to relocate to Hong Kong.”
A survey of 260 executives by the European Chamber of Commerce even showed that almost half of companies were considering moving elsewhere next year.
On Hong Kong Island, rents in upmarket, expat-favourite areas such as Mid-Levels, Pok Fu Lam, and Jardine’s Lookout have fallen by between 1.4% and 2.7% in the first three months of the year. But the biggest declines were in Ho Man Tin, Kowloon Tong, Discovery Bay and Hung Hom, with falls of between 3.4% and 5.3%, according to Savills.
Japanese executives return but business travellers lose out
However, the property consultancy is seeing increased interest in luxury flats in Hong Kong from Japanese financial executives. “More and more Japanese are looking to find flats in Hong Kong, according to anecdotal evidence from our agents” Simon Smith, regional head of research and advisory, Asia Pacific, Savills, comments. “(They) are looking for accommodation in Tsim Sha Tsui as their offices are primarily in that area.”
If Hong Kong is not willing to change its requirement for a seven-day quarantine for all international arrivals and mandatory isolation in a government facility for all Covid-19 positive cases by the end of the year, “it could be more difficult to recover”, Victoria Allan observes. “I expect more expatriates to leave if they don’t drop the quarantine and it will also depend on how they handle Covid-19 positive cases in schools,” she says. she continues.
The flight of expatriates and business travellers is easily explained by Hong Kong’s stringent policy. But if this policy continues, the entire luxury real estate sector will continue to suffer due to the drop in demand.
Read also > CHINA: INVESTORS ARE INTERESTED IN LUXURY RETIREMENT HOMES
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In China, the increase in Covid-19 cases has sent some cities into lockdown. There will be many consequences, especially for real estate.
In Hong Kong, analysts are predicting luxury home rents will fall by up to 15% as expatriates leave to escape the country’s zero Covid policy.
Indeed, in the first quarter of 2022, rents for high-end houses and flats fell between 2.6% and 4%, with the Kowloon and New Territories areas seeing the biggest drops, according to property consultancy Savills.
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In China, the increase in Covid-19 cases has sent some cities into lockdown. There will be many consequences, especially for real estate.
In Hong Kong, analysts are predicting luxury home rents will fall by up to 15% as expatriates leave to escape the country’s zero Covid policy.
Indeed, in the first quarter of 2022, rents for high-end houses and flats fell between 2.6% and 4%, with the Kowloon and New Territories areas seeing the biggest drops, according to property consultancy Savills.
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