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

Hong Kong rents are rising again as overseas workers return to the city, a recovery that contrasts with a cooling rental market in rival financial hub Singapore.

Hong Kong rents rebounded from a first-quarter decline to climb 2.8% in the second quarter of 2023, according to Knight Frank data. Singapore recorded the same pace of growth, but that marked its weakest showing since 2021, down sharply from a recent peak of 8.6%.

The push to reverse a pandemic-era brain drain is drawing new arrivals to Hong Kong neighbourhoods popular with professionals, such as SoHo and Kennedy Town — where growth is now roughly double the pace seen in comparable Singapore districts. In Singapore, meanwhile, pre-election policy measures aimed at cooling property prices appear to be taking effect.

"The trend is poised to persist, with Hong Kong's rental market rebound affirming its resilience as a financial hub. Singapore's decelerating rental market may offer relief to expatriates previously deterred by escalating rents." — Christine Li, head of research for Asia-Pacific at Knight Frank

Hong Kong's rental rebound

Hong Kong rents remain about 9% more expensive than Singapore's on average, Knight Frank data shows. James Fisher, chief operating officer at real estate platform Spacious.hk, said Hong Kong is seeing its strongest rental market since July 2018 and expects rents to climb a further 2-3% by year-end, citing rising mortgage rates and softer sales pushing more people toward renting. Bloomberg Intelligence forecasts residential vacancy rates in the city will fall by December.

SoHo led the growth with a 5.5% quarter-on-quarter increase, followed by Kennedy Town at 4.7%. Gains were more muted in wealthier beachside districts like Repulse Bay.

Singapore's cooling rents

Singapore rental growth across mass-market to high-end apartments eased to 1-3% last quarter, down from at least 9% in the first quarter, Knight Frank data shows. In District 9 — home to the upscale Orchard Road shopping strip — 800 sq ft (74 sq m) apartments now lease for around S$4,888 (US$3,587) a month, according to OrangeTee & Tie, with quarter-on-quarter growth for such units falling from 8% to 3% over the past year.

OrangeTee & Tie senior vice-president of research and analytics Christine Sun said rental growth has slowed across all districts, with deals taking longer to close as buyers show more price resistance.

Source: South China Morning Post (via Bloomberg)