Posted by
mamadavid
15 yrs ago
Like all the other renters in HK, we're hoping to get a decrease when we renegotiate our lease in a few months. Is there reason to believe that rents in (corporate owned) luxury buildings will fall? (Unlike private landlords, they so far don't seem willing to make any substantial concessions to the current economic situation. Does anyone have any insight or understanding of what would make them continue to stand firm (and leave flats empty) or decide to give in? Here on the south side there seems to be a lot of empty housing stock. The Nina Wang building looks like it's making another attempt to get tenants, and there are of course a lot of expats losing their jobs and going home (and in June there will be the usual exodus). Would be very interested in hearing people's thoughts / predictions.
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Purely from a supply & demand point of view, I would expect the buyer's market to continue for a long time, i.e. rents are more likely to go down than up. There are more expats leaving than arriving and the new arrivals come on less generous housing allowances (if any) than before!
Of course there are also other factors at play.
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Thanks for your reply onemorething. What are the other factors in play?
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Mortgage rates, rental yield, and house prices in general.
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Our lease expires in two months. when is the bounce predicted?
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walkup2> "the bounce"? Can you substantiate your claim please?
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ceeh
15 yrs ago
We are in what is considered a luxury apartment in mid levels and our lease expires at end of this month (April). Our landlord will not reduce the rent but has agreed to keep it at the same cirrent level for the renewal.
His logic and this has been also written in the SCMP is that the high end apartments are being vacated due to the 'crisis' and those tenants are moving down a notch to mid levels so this is keeping the current rentals stable.
We hate the idea of looking around and then moving so look like giving in and renewing at the same price as the previous two year lease. We have looked at about a dozern apartments in the same building and they are not reducing either.
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So there are about a dozen vacant apartments in your building, that tells me one thing: rents will come down.
Rent for Mid-level flats are at 2005 levels in my observation. That is about 20-30% down from two years ago. The SCMP tends to try to write the property market up. Not surprising if you know who the owner of the SCMP is!
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We're able to break our lease mid August. And although I wouldn't mind moving (but prefer not to), I have problems signing another lease with a 12+2 (or something similar) month contract. Especially in this market. That seems risky too, although I am dying to get a lower rent (and rents in our building our down).
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Anyone have experience of renewing on the south side in the past month or two?
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Is it true there might be another leg down after expats school season ends? Any signs at all that property is coming back?
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To the op, we just renegotiated rent down 20%. Things are looking a little rosy for a temporary blip right now with gains in stock market but I would be highly surprised if there isn't another massive crash coming soon which might put you in a good spot for rental negotation in a couple months.
The direction of rents will oppose those of unemployment and that most certainly continues to be heading up. We are still a long way from SARS prices, and the scenario looks far worse than SARS whichever way you look at it.
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Thanks for your replies, everyone. As I mentioned, our building is fully corporate-owned -- so we're not expecting negotiations to be easy. Mayafox, on what basis did you obtain your 20% decrease and how did you present your argument to your landlord?
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If your lease is about to expire and you don't get a substantial reduction, look around and move. THat is the only way to get it done. Its a hassle to change but is worth it. It's true is convinient if they keep current price of the rent and save the hassle to move out but over a 12 months period is worth. Landlords have to be "forced" to accept reallity. If they want to keep their flat vacant for month and months, is their problem, not ours.
About people losing their jobs and staying, thinking something will come out, is just a dream waiting to happen. It will not happen. A sure waste of money staying here. It's part of the process to accept reallity and once you lose your job ( and you were an expat), chances to get hired as an expat are close to nil. As a "local" you might, but you will have to change flats anyway.
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As I was saying on a different post, a friend whose a landlord decided to offer a below-market rate in order to keep a good tenant and to save the hassle and expense of looking for someone new.
Sounds to me like a good ending as both parties seem happy with the new arrangement - the tenant feels appreciated and the landlord saves hassle.
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rents will simply continue to fall until there is a bottom in the housing market. If you look to the west, late 2010 early 2011. Here in Asia, specifically HK who look directly into these markets, I'd say about the same but maybe sooner.
Like a variable interest rate, why not renegotiate the rent down 20-25%, then when your landlord wont go any further, negotiate the term from 12+2 to 6+2. I did, and went from $60K to $45K last Sept and now we are in April and I'm shooting for $32K.
Play the game or BE PLAYED!
Deflation will continue in HK until the all the air (between RE investors ears) are gone.
Then an L shaped recovery will happen while interest rates stay low, unemployment high, you make the call!
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dasia
15 yrs ago
We are in Robinson Place and coming to the expiry of our two year lease. We asked for a 15% TO 20% reeduction for a 2 year renewal and was told by the Agent that the landlord will not reduce. Our landlord owns quite a few in the buiding and will not budge. We don't particularly want to move so may try for a 6 + 2 and see how the market goes.
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dasia
15 yrs ago
yes there are and the prices remain the same. The landlords will not reduce!
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live in taikoo shing and coming up on my 1 year, proposed to landlord to renew for 1 year at a 25% discount. she came back with a 12.5% reduction so going back to her with her proposal but for just 6 months. 2nd half of this year will probably be down vs the 1st half and want to make sure i'll be available to take advantage of that.
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Landlords are counting on the tenant's reluctance to move to a new flat. You could try to call his bluff, but you have to be prepared to move, if he says no. A vacant flat in this market will hurt the landlord a lot, but it is a bit of a Pyrrhic victory if you take the hassle of moving into account.
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Maybe you are bying at the moment, its difficult as prices are rising, and a low asking price will have risen by 15-20% by the time you get to view the property.HSBC recently upped their valuations by 10-15%., so naturally sellers are more bullish. The addage of "buy on a rumour" has certainly sent the stock market on a huge rally. Its all down to sentiment.
My company pay rents based on a moving scale for mangerial grade. Our rental allowance has fallen nearly 30% this year, if you were to renew.Unlikly any landlord will let you reneg this low so often moving is the only choice. Best to lock into a 2 +1 year deal if you can get a good reduction as I asking prices will rise with an appreciating stock market, even if demand ois low. This is the asian way!
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dasia
15 yrs ago
Patrick, I notice you are advertising an apartment in RP at a high rent which surprises me after your comments above!!! You seem to be contradicting yourself as far as RP goes?
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I have lived in rental accommodation in HK since 1993 (corporate policy) and have lived in 7 different flats. You should be getting a discount now and if you are not then look for a new place and move!! Once the landlord (or his agent) knows you are going he may become more flexible. It is always so easy to open a negotiation on the landlord's side by saying "no".
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Rents will continue to come down especially as we come up to summer. Just call Crown Relocations and ask if you can get a quote to move internationally on the first week of July. They will tell you that they are fully booked and cannot even give you a quote. I think that as we move into May and people leaving in the summer begin to give notice landlords will panic and take crazy deals just to get a renter in there rather than let their place sit vacant for potentiallly 3-6 months. My suggestion is to bite the bullet and move, be ruthless and offer 40% less than asking on a new place and keep going until you find that landlord who is motivated enough to accept.
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dadda> Statistically you really are an exception, and a way-way above average expat. You belong to the lucky few who are financially blessed. You come across like you never venture outside your expat area. There are a lot of expats that earn less than $50k per month, which by local standards still is a very decent salary. Obviously expats in this pay segment won't advertise their salaries. Like people only "boast" about profits they make investing in shares, and never talk about their losses.
[EDIT: changed latter part of post to stay more on-topic]
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dada - Are you crazy? No expat allowances and you give up 61K to pay someone elses mortgage? Buy or downsize my friend the big swinger days are gone. Unless your company makes you take the rent then that is just way too much to pay someone else each month no matter how much you earn.
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mdap
15 yrs ago
To Patrick Yiu - not all bankers are corrupt and where do you think the money came from for you to build all those bridges- banks! The system of lending is not the seed of corruption if loans are made to people who can afford to repay. Americans have lived on un-repaid debt for decades and we ALL pay for their greed now. As for the wider debate re rents, I am a Landlord with 4 properties in HK - the cheapest being a two bed place in Disco Bay, the most expensive being a 4 bed place on the Peak (Barker Rd) ... I have great tenants in both and reduced the DB rent by $10k a month to keep them in place and I reduced the Peak rent by $25k a month for the next 12 months for those tenants. It is a tenants market at the moment and there is plenty of choice for people to move anywhere in HK for reduced rents at the moment. Most landlords will negotiate to retain tenants, but if you are expecting reductions of 50% then better to call Santa Fe now !
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We recently negotiated a 45% decrease in rent from the peak of the market. Apartment is in South of Island. Anything is possible in this market if you are prepared to plat hardball. This is with one of the large landlords.
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mdap
15 yrs ago
Yes ok point taken :) My max rent reduction was 30% for my place in Happy Valley and the tenant was very happy with that and I was very happy to a) help her and b) keep her. I guess the problem in HK is many landlords simply don't need the money as often the places are not mortgaged. My neighbour (also on Barker Rd) has left a stunning 4 bedroom townhouse empty for over three years now as they refuse to reduce the rent from the halycon market times! It is a great time to negotiate deals on both sides of the landlord/tenant fence at the moment. My mother lives in one of my properties - about time I reduced her rent then :)
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Our landlord increased the monthly rent and he only gave noticed verbally 28 days before the contract expires. It's so unfair, I live in Tai Po NT.
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No offence but mdap are you serious when you said 'about time I reduced her rent then' - are you actually asking your mother to pay rent for staying in one of your own properties? Hope you are joking.
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indeed, I live in Clear Water Bay, and it seems that prices don't come down as on the island, neither for rent nor for purchase... that's quite frustrating since it seems there are plenty of empty places around
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mdap
15 yrs ago
Dear HOMELY, I laughed out loud when I read your comment. For the record, my mother lives rent free in the apartment which I bought for her as she likes the lifestyle in DB ...
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Oh mdap, I am so glad it was a joke......it did cross my mind that you were trying to be humorous. Your mother has a good son. Thanks for letting me know.
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Most of my friends or colleagues who live in Mid Levels have negotiated significant rent reductions in the last couple of months - across the board they've been able to get at least 25% scythed off.
From anecdotal evidence I think many people are leaving Mid Levels because of traffic congestion and noise levels (with all that pile driving, who the hell wants to be there on a weekend?). Thus rents are driven down even further.
Dada, $61K for 2,200 sq. ft. on the South Side? You may want to look around some, that seems a little steep. I know of folks paying less than a third of that for 1,600 sq. ft. plus terrace.
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Let's face it moving is a hassle though it can be a living betterment. Many properties especially those with a decent living environment and views have experienced no rent reductions, and now showing signs of increases. Like anywhere a kind landlord will reduce rent to a good tenant. If there really is a mass exodus of expats during the summer like some predict there should be some more reductions in their more popular areas to live in like mid levels and the south side. But what do those leaving have to go back to ??
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There are many places available on Southside and rents are negotiable according to most agents. I think even some of the big landlords have dropped their rents (flats in our building)
We moved in Feb/March and our previous place is being let for 25% less than the advertised.
Thing is, with the expats, is that they are sometimes inexperienced in negotiating something like rent and end-up paying what is asked, or not much less, by not understanding that you can negotiate (and also negotiate for renovations/new appliances etc) or offer to pay half, as certain renovation etc. Some of the Aussies in our road, negotiated rent-free months, rather than the landlord 'lose face' by lowering the rent too much.
Others, naievely end up paying much more (just agreeing to rent rises) so kick themselves when they find out what their neighbours did, or what incoming tenants are getting the place for.
The thing is, in Europe (not sure about the States) the rent is the rent. Rarely can you negotiate.
Ludicrously, I have heard some people, say, with a sigh, they will be having their rent increased next renewal, even in the current market. They have no teeth to negotiate. Just move to a cheaper flat!
Of course some landlords (usually the big ones) dont mind if their flat is empty, but, I think more and more, they will mind, as the expats will keep re-locating to the more reasonable landlords places.
Our agent thinks their will be an exodus at the end of June, when the international school break-up for summer and also reported many clients who WERE paying 100K+ wanting to move to 40K odd flats because their companies will no longer pay the rent allowance. Some are cutting the amount they contribute to club membership, for instance, as well as rent. These are recent changes in the last few months.
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How many landlords "keep up with the market" when setting their initial asking price? From the asking rents that continue to be posted in estate agents' windows, it looks like it's still very much up to the prospective tenant to negotiate the rent down to a realistic level.
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mamadavid> Did you manage to negotiate your rent down? You have one month left on your contract, right?
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Seems we have a little longer left on the current lease than I thought. Am hoping this will work in our favour as negotiations will start in June, just as lots of expats leave.
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So, have the expat migration out of HK started yet? Has it affected rental rates?
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I renegotiated my rent effective June 1, 2009. I was paying 16,000 for a 3 bedroom flat in Wan Chai approx 800 sq ft. on a 1 year locked in lease. Now I pay 12,500 for 1 year with an escape clause on 1 month's notice. That's about a 21% discount. I looked at everything there was in the same area to be well armed with fact and found that's about where the market was. I could have moved and gotten a slightly better deal, but there's cost to that as well, plus the aggrevation. So...in my humble opinion rents have dropped and will continue to drop. This recession isn't over and it'll take until 2014 just to get back to where things were before the meltdown. So grind your landlord as much as you can and move if they want to be stupid and hold out. There are a lot of takers out there at lower rents. Hope this helps.
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Am moving into a 1420 sq ft apt in a three-year-old estate in Sham Tseng. Yes, it's a bit out of way (30 minutes by bus to Central) but I got it for HK$13,800 from the original asking price of $15,000. I opted for a two-year fixed rate lease with a two-month escape clause. I think I got lucky with a rational owner who's not unrealistically greedy as many HK landlords tend to be.
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Nuinhk, does the 13.8K include the management and government rates?
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My new neighbours moved in this week and pay slightly less than when I signed my lease back in March (at the property and equity market trough).
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I have been living in my current flat in caine road, an old chinese building with 580sqft, two bedrooms, new kitchen, and only half-renovated bathroom ( still very old tiles) for one year now, on a 1 year lock lease + 2 months. I am paying 11K, initial asking price last year was 13K, but I negotiated down to 11K. I am wondering whether this is reasonable in the current market situation. The windows are really thin and noise from outside is quite high and starts to annoy me. I am thinking about moving to a cheaper, nicer and newer place in the same area or to re-negotiate with the property agency. what do you think could I negotiate? will it be possible to get a better and newer apt in same area, about same size?
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My company (an airline) sets rental reimbursement based on the Government housing indeces. They reached a peak about December but have since fallen by about 35% and are still falling. Down my road, all the expats are either pilots or financiers and the one common theme is empty properties. All are asking above the Cathay Pacific rental limit and the fiancial institutions are cutting their limits drasticly. Unless the landlords become more realistic, they will stay empty for a long time.
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kimmy
15 yrs ago
I thought rental prices were still going down but have been somewhat surprised to find prices at a high-end complex in pokfulam to be quite high (with v little room for negotiation). 50k for 1700'. Very little supply too. (which again is surprising as I thought many expats' were leaving as holiday season etc)
I wonder if supply will increase next month (i.e. driving prices a little down), what do you guys think?
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sxc
15 yrs ago
If a property is owned by a corporate, they tend to not negotiate on price and would rather leave it empty. It is part of the way property developers manipulate the market in HK.
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Patrick
How are the rent in Bamboo Grove? 16 vacancies - prices should be a bit lowered?
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Planing to move as our lease is up. Our landlord treats us well and has even reduced the rent but we need something different....so the rent is not going down....guess we'll stay in our present flat for awhile as we can just give one month's notice to our landlord when we find something suitable.
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