Analysis suggests that rent will rise at least 3% next year, driven by demand from local and foreign talent
According to data from the Rating and Valuation Department, the private residential rental index in November was 193.1, a month-on-month decrease of 0.4%, with the annual increase narrowing to 4.1%. It is expected that rental prices will rise by 3% to 6% next year due to the continued increase in demand from local and foreign talent. Market analysis indicates that despite the increase in new supply, the demand brought by talent input programs will support rental performance, especially for small and medium-sized units
The Rating and Valuation Department announced that the private residential rental index for November is 193.1, a month-on-month decrease of about 0.4%, marking a decline for two consecutive months; the year-on-year increase has narrowed to 4.1%, with a cumulative increase of 3.8% this year.
According to market statistics, 19 new developments are expected to be completed in the first half of next year, involving more than 8,000 units. Midland Realty believes that based on the investor entry ratio of about 20% to 30% over the past two years, the supply of new rental units may be around 2,400. This year, 75,000 talents and their dependents have come to Hong Kong through the Talent Admission Scheme, so there is not much concern that a significant increase in supply will put pressure on rents, and rents are expected to rise another 6% next year.
Wang Zhaoqi, Director and Head of Greater China Research and Consultancy at Knight Frank, believes that local citizens remain cautious about buying properties. However, the current rental yield has reached around 3% to 3.5%. If mortgage rates, currently around 3.5%, further decline to below rental yields, it may attract more citizens to switch from renting to buying.
Wang Zhaoqi believes that the demand from local and foreign talents will continue to support rental performance, with branch families and foreign talents showing significant demand for one to two-bedroom small to medium-sized units. It is estimated that the rental index may rise another 3% to 5% next year, setting a new historical high
