(Bloomberg) -- After a bargain on an upscale apartment in the world’s most-expensive property market? Now may be the time.
The spreading coronavirus has crunched rents for luxury homes in Hong Kong as wealthy individuals hesitate to sign leases amid the gloomy economic outlook.
Landlords have cut their asking prices by as much as 20% since mid-March in a high-end area of West Kowloon, according to Arthur Chui, a senior sales manager at Midland Realty. Far fewer international companies are looking for accommodation for their staff from overseas, he said. That used to be another big source of renters in the district.
“The volatile stock market has put pressure on landlords’ capital,” said Chui. “Even though these rents are rather insignificant to them, it’s still better to lease the properties out versus leaving them vacant.”
The one-two punch of anti-government protests that started last year and now Covid-19 has pushed Hong Kong’s economy into recession. The benchmark Hang Seng Index sank to the lowest level since 2016 earlier this month while the city’s unemployment rate is the highest in almost a decade.
A three-bedroom apartment near West Kowloon station was leased for just HK$32,000 ($4,130) a month recently, 20% less than what the landlord was initially asking.
Developments in the area are among the city’s most prestigious. Tenants are walking distance from Hong Kong’s tallest skyscraper that houses luxury shops like Prada and Louis Vuitton, swanky hotels and restaurants, as well as the station that connects to China’s high-speed railway system.
Across Victoria Harbour, expensive neighborhoods favored by expatriate bankers and lawyers are also seeing rent declines. Listings in Soho and Sheung Wan dropped by 7.3% and 6% from a year earlier, exceeding the city’s average of 5.1%, data from online property listing platform Spacious show.
The cost to rent a 500-square-foot, two-bedroom apartment in Hong Kong last month averaged around HK$17,700.
Apart from concerns about the deteriorating economy, social distancing practices over the past few months have contributed to the drop in leasing activities. It’s impossible for people to physically search for a new place to live while they’re stuck at home, said James Fisher, chief operating officer at Spacious. The internet also has its limitations.
“If this persists for three to four months, we could be looking at declines across the board of up to 10%,” he said.
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