Residential rents in Hong Kong have stayed strong, despite a large increase in the number of flats available for lease since the government announced cooling measures to control real estate speculation at end-November.
”Many investors responded to the increase in stamp duties on short-term re-sales of properties of 5 percent to 10 percent, depending on the holding period, by withdrawing their flats from sale and choosing to lease them instead,” said Angus Chan, a sales manager at Centaline Property Agency in Sha Tin.
Thus, housing estates in the New Territories, such as City One Shatin, which were popular among investors last year, saw a steep increase in the supply of flats for lease.
Based on Centaline estimates, the number of flats available for rent in City One Shatin has risen to 170 from about 80 to 90 flats prior to the government’s announcement of additional stamp duties.
Rents, however, have not declined, though the supply has grown significantly. ”This is because demand from tenants is very strong at a time when many home seekers are waiting for a fall in property prices before they buy,” said Mr. Chan. He also noted that the number of leasing transactions at the estate increased 11.5 percent to 116 deals in December.
However, the average price of a flat in the state has now increased to HK$5,292 psf from HK$5,180 psf prior to the cooling measures.
Mr. Chan said the supply of leasing flats would continue to grow in 2011.
”Investors who bought flats last year will be reluctant to resell quickly to avoid paying the additional stamp duty. They would rather keep their flats for leasing,” he said.
The demand for leasing flats will also remain strong as the rising prices of properties will continue to drive away many home buyers.
Rents at City One Shatin would be flat in 2011, he added.