Hong Kong luxury home rents rose in third quarter; Singapore’s reported decline

Hong Kong’s luxury home rents rose 1 per cent in the third quarter from the previous three-month period, while Singapore’s slipped by 1.7 per cent, highlighting the contrasting fortunes of Asia’s rival business hubs, Knight Frank said.

The increase in Hong Kong rents was partly attributed to government measures aimed at attracting more foreign talent to the city, while Singapore has begun to address its sizzling hot rents that began rising during the coronavirus pandemic, the property consultancy said in its latest report.

Singapore was, however, behind only Sydney among the 10 cities that Knight Frank tracked in terms of annual rental changes. Rents in the Lion City increased by 14.5 per cent in the last 12 months, while Hong Kong ranked 10th with a mere 1.6 per cent increment in the same period, Knight Frank said.

Singapore is one of three stand-out markets where rents have surged tremendously since 2021, the report said. While rents have risen by a cumulative 50.3 per cent in Singapore, they have increased by 55.2 per cent in London and 53.4 per cent in New York, respectively, in this period.

“Over the past two years, Singapore’s rental market has witnessed unprecedented surges, setting records,” said Christine Li, head of research, Asia-Pacific at Knight Frank. “The higher rental rates are currently undergoing a normalisation phase against the backdrop of slower economic growth.

“In Hong Kong, the reset of rental prices occurred earlier, and the market is now striving to achieve equilibrium, with increasing demand surpassing available supply.”

In Singapore, rents are likely to moderate further in the coming quarters, Knight Frank says. Photo: Shutterstock

The property consultancy has forecast that the rental markets in both Singapore and Hong Kong will grow by 3 to 5 per cent next year.

“We posit that sustained demand for long and short-term residential leasing, driven by entrants under the ‘Top Talent Pass Scheme’ and overseas students in Hong Kong, will play a pivotal role in bolstering the recovery of the residential leasing market,” Li said. “This effect is expected to be particularly pronounced in areas proximate to universities and emerging residential districts.”

An estimated 70,000 people have arrived in Hong Kong this year through talent admission schemes, double the government’s original target, according to the latest figures cited on Saturday by Labour and Welfare Secretary Chris Sun Yuk-han.

As Singapore’s soaraway rental boom cools, Hong Kong rents heat up

Besides demand for accommodation from its new residents, the city’s elevated interest rates have also shifted demand for home purchases to the rental market, according to Martin Wong, director and head of research and consultancy for Greater China at Knight Frank.

Rising interest rates, which have pushed up mortgage rates, have risen to a 16-year high with base rates at 5.75 per cent. The Hong Kong Monetary Authority has raised rates by a cumulative 5.25 percentage points since March 2022.

“Affordability continues to be an issue for homebuyers, as interest rates are set to remain higher for an extended period,” Li said.

In Singapore, rents are likely to moderate further in the coming quarters, according to Knight Frank. About 9,000 private residential units were completed in the third quarter, the highest new supply tally in a quarter since the second quarter of 2016, Li said. For the whole of 2023, about 20,400 private residential units are expected to be completed, the highest annual completion since 2017, she added.

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