Owners of Hong Kong's luxury homes choosing to rent rather than sell
THE deep freeze in what was the world’s hottest property market is prompting a significant shift in strategy by homeowners in Hong Kong.
With prices approaching a seven-year low and sales the fewest in nearly three decades, many owners are choosing to rent out second or third properties rather than sell, hoping that the downturn will end when borrowing costs fall and China’s economy improves.
Even the government has suspended residential land sales for the first time in 14 years due to poor demand.
For top-end properties, finding a tenant at a time when global and Chinese firms alike are retrenching can be a challenge. While rents broadly have risen from their pandemic lows, they remain below levels seen five years ago.
There are more than 20 properties on luxury real estate agency Landscope’s website listed for at least HK$300,000 (S$51,050) a month. Among them are some unusual, prestigious homes.
Swire Group is looking to rent out a 5,480-square-foot semi-detached house on the Peak’s Severn Road, near the official homes of senior government officials, despite receiving permission to redevelop the building. Swire is asking HK$330,000 for the historic property, which includes five bedrooms, a private swimming pool and working fire place.
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Another unique property available nearby is Chu Wan, a roughly 4,000-square-foot house close to the Peak Tram terminus. The former family home of powerful stockbroker and philanthropist Lee Woo Sing has been put on the market at HK$600,000 a month by his descendants following his death in 2022, aged 94.
The secluded three-story, four-bedroom property, reached via a steep drive accessed by Mount Austin Road, has a sizeable garden and views of both Victoria Harbour and the jungle-clad southern side of Hong Kong island. It has a grade-3 heritage listing.
Single-lot houses like Chu Wan are “very rare” finds in the rental market, as they are often built for self use and usually remain under the ownership of their original occupants, says Landscope founder and CEO Keng Shing Koh.
The Peak, long considered the city’s most exclusive neighbourhood, was a favoured target by wealthy mainland Chinese buyers before President Xi Jinping’s crackdowns on private enterprise and an economic slowdown cut demand. In 2015, Alibaba Group Holding co-founder Jack Ma paid US$192 million for a house on Barker Road. The following year, mainland property tycoon Chen Hongtian broke records in Hong Kong, spending US$271 million on a Gough Hill Road home.
These days, the market is only going in one direction, weighed down by a flood of distressed properties.
Super luxury prices in Hong Kong have fallen by 25-30 per cent in the past 18 months and may decline a further 15-20 per cent over the next 12 months, Savills said in a November report. Chen’s house, like many others bought by Chinese real estate moguls, was seized last year by a creditor after he fell into financial difficulties amid China’s property market slump.
“Mainland clients who were key buyers in the last decade are now lying low,” said Koh at Landscope, which is one of the agents for Chu Wan. “The market may only go up again when the economy in the region recovers.” BLOOMBERG
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