[ET Net News Agency, 25 September 2020] A mixed picture of rental development is
reflecting business uncertainty as well as local market dynamics. Hong Kong Island and the
New Territories saw very mild rental declines of 0.4% and 1.7% respectively over the
quarter, according to Savills.
Luxury rents in Kowloon rose by 1.2% in the quarter due to leasing activity over the
summer when families traditionally move to prepare for the new school year. Landlords are
more willing to offer longer rent-free periods and early handovers as incentives. Short
lease terms of one year are also becoming more common.
Townhouse rents recorded a mild fall of 0.8% in 3Q, representing a sixth consecutive
quarter of rental decline. Serviced apartments offered a series of promotions to rescue
occupancy levels. Serviced apartments and serviced offices, which offer flexible lease
terms for home and corporate renters, are popular given concerns over the tough operating
environment faced by many businesses.
The next quarter (4Q), the traditional low season, is expected to be challenging due to
fewer arrivals in the economic recession, Savills added.
"The rental market still seems precariously balanced as tenants and landlords face
uncertain prospects. Some regions are seeing modest rental increases while elsewhere much
more flexible terms are on offer including shorter leases," said Simon Smith, Senior
Director, Research & Consultancy at Savills.
"Landlords and tenants are learning to navigate the current uncertainty with one-year
leases, early handovers and rent-free periods. The fourth quarter is likely to see more
challenges and we expect rents to soften further," added Aradhana Khemaney, Head of
Residential Services at Savills. (KL)