Hong Kong housing rents are set to decline as anti-government protests continue to rock the city.
Real estate professionals forecast rents on Hong Kong’s main island, home to the central business district, will fall 2% in the next year, according to a survey conducted by the Royal Institute of Chartered Surveyors released Thursday. That’s a reversal from the 3% gain forecast in the previous survey, which was held just as the large-scale protests started in June.
“The recent events serve as a tangible reminder that Hong Kong has 28 years of ‘one-country, two-systems’ remaining and during that time there is potential for significant upheaval,” said James Fisher, chief operating officer at Spacious, an online property listing platform that conducts the survey with the Chartered Surveyors institute.
“This could trigger a third wave of overseas emigration as many in Hong Kong hold overseas passports already; but I don’t think we’re at that point yet,” he said.
Residential rents climbed almost 8% in the two years through June, to be near a record-high, data from the Hong Kong Rating and Valuation Department shows.
The city is the most expensive in the world in which to rent a mid-range two-bedroom apartment, according to Deustche Bank AG’s 2019 ‘Mapping the World’s Prices’ report. At $3,685 a month, the cost is 27% more than you’d pay in New York, the report showed.
Weeks of protests, which have morphed from opposing an extradition bill into a mass repudiation of China’s hold over Hong Kong, are starting to bite the city’s property market. Office vacancy rates in Central climbed to a three-year high last month, Jones Lang LaSalle Inc. said earlier this week.
“The increase in severity of the protests appear to be weighing on the rental market, though rents still appear to be more resilient than prices,” said Sean Ellison, the institute’s senior economist for Asia Pacific. “The protests do remain the main concern of survey participants, with several respondents highlighting it as a persistent downside risk.”
The survey received 150 responses, mostly from chartered surveyors working in the property industry.
Home sales have also been hit. The amount of residential property traded in July fell 35% from a year earlier, according to Ricacorp Properties Ltd.