Hong Kong’s rental market for high-end properties and office space is set for another hike, as Asia’s business capital remains the most expensive place for rent globally.
According to ECA International, rents for an unfurnished luxury three-bedroom apartment in Hong Kong averaged $11,813 per month in the fourth quarter of 2011. That is a 12 per cent increase on 2010 figures. The territory is followed by Tokyo, Moscow, New York and London.
“International assignee numbers in Hong Kong have increased again over the past two years, contributing to the demand for rental accommodation,” said Lee Quane, Regional Director at Asia ECA International, reports CNBC.
Quane tells CNBC that has put a lot of strain on the already limited supply of rental housing. He also believes that while the general rental market may see a fall in prices, it is unlikely to reflect on the luxury end of the spectrum.
Across Asia as a whole, rental prices for luxury three-bedroom apartments have gone up 5 per cent in local currency terms over the last 12 months. Rents in the region now average $3,680, nearly 20 per cent higher than the global average of $3,080, reports CNBC.
Meanwhile, prices for office space in Hong Kong, where major corporations like HSBC and Citibank have set up their Asia centres, are also expected to rise. This has made some uneasy about the prospect of their accommodation becoming a major cost for their presence in the business hub.
The Malaysian Insider reports that the Swiss investment bank UBS faces a 10-fold rent increase in the world’s most expensive city for office space, as the main lease on its Hong Kong offices nears its end.
The bank managed to secure a honeymoon rate in 2003 for a 10-year lease, which was well below the market value. At that time, Hong Kong real estate was in turmoil following a major economic crisis and the fallout from the SARS epidemic outbreak.
UBS has occupied 146, 070 square feet across six floors of the highly prestigious Two International Finance Centre (IFC) in the heart of the island’s business district. The corporation paid HK$4.7 million per month. The rate is now expected to increase 10-fold to $47 million.