Expats moving to cheaper areas

Expat tenants forced to move to cheaper areas to escape rising rents


Rising rents and reduced living allowances are driving expatriate workers out of their preferred neighbourhoods as their leases come up for renewal, estate agents say.

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. . .he is now reluctantly searching for a cheaper apartment elsewhere.


"I'm paying a lot more here than I want to pay. I have lived in Europe and the Middle East before, and renting in Hong Kong is by far the worst. You pay more and get less for flats that are of a low quality," he said.


He is now looking for a flat in Kennedy Town and hoping to pay less than HK$10,000 a month.


John's experience is typical of a growing number of expatriate workers in the city, who are relocating to outlying districts because of increasing rents, property agents said.


Research by Global Property Guide, a United States online property research website, shows Hong Kong is the sixth most expensive city in the world for renting a 1,288 sq ft flat.


Housing allowances paid by employers have also fallen. Another agent who focuses on the expatriate market and asked to remain anonymous said many companies cut allowances for their expatriate employees after the global financial crisis in 2008.


"Most of my clients' rental allowances had fallen from HK$30,000 a month to HK$20,000 a month," he said.


Patrick Chow Moon-kit, head of research at Ricacorp Properties, said: "Tenants who have to renew their lease this year face a 20 to 30 per cent rise in rents."

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> http://www.scmp.com/property/hong-kong-china/article/1426069/expat-tenants-forced-move-cheaper-areas-escape-rising-rents

"Research by Global Property Guide, a United States online property research website, shows Hong Kong is the sixth most expensive city in the world for renting a 1,288 sq ft flat."

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Who really needs a flat that large?

Probably ony a family with more than 2 children.


I think the survey is idiotic, because it probably excludes the more reasonable areas like: Tung Chung and LOHAS park. In other cities, expats happily commute the sorts of times and distances needed to get to those places

"Research by Global Property Guide, a United States online property research website, shows Hong Kong is the sixth most expensive city in the world for renting a 1,288 sq ft flat."

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Who really needs a flat that large?

Probably only a family with more than 2 children.


I think the survey is idiotic, because it probably excludes the more reasonable areas like: Tung Chung and LOHAS park. In other cities, expats happily commute the sorts of times and distances needed to get to those places.


- -


THIS is a key point - Rents are maybe still rising in "prime" areas, while they are likely fall in some NT locations:


+ Patrick Chow Moon-kit, head of research at Ricacorp Properties, said: "Tenants who have to renew their lease this year face a 20 to 30 per cent rise in rents

+ But while rents in central districts will rise, rents in the New Territories could fall 10 per cent because 5,000 new flats will be completed in the area this year.


It is not as if the NT locations are "unsafe"... All of HK is safer than the prime areas of London or NYC

"Tenants who have to renew their lease this year face a 20 to 30 per cent rise in rents."


I call b/s on this as far as Mid-Levels is concerned. Having just sourced a new tenant for one property and started the search for a second one that will become vacant in mid-March, I can confirm that the idea of getting any rental increase at the moment is the stuff of fantasy. Any landlord asking for 20-30% more than the market rent they got two years ago is probably qualified to be the next financial secretary.

I agree -

However, I suppose it is possible, if you are comparing is with a lease negotiated two years ago.


The real idea is to try to get expats to look at "new" areas where a flood of supply is coming...

My favorite whipping girl (AM Sage) has been quoted in the SCMP today


OLD QUOTES:

HK Developers' game: Cut Prices? - Singapore Serviced Apartments

Here's Anne-Marie Sage, as quoted in Square Foot: "Rental allowances will have to increase as the overall market is up 17.6 percent since this ...

hongkong.asiaxpat.com/forums/.../hk-developers-game:-cut-prices?/


The State of the Hong Kong Property Market (9) - Singapore ...

Apr 29, 2013 ... What happened to Anne Marie Sage - who always you to say that Luxury Rents would only go upwards? Has she been transferred to Mongolia, ...

==

Eventually, after constantly pumping up the market, she saw reality last year:


The End of Wall Street As They Knew It | Business ... - AsiaXPAT

... closer to local terms. (The once always-bullish-on-luxury ) Anne-Marie Sage chips in, saying she "expects the drop in luxury rents to continue....

=== ===


Now she is quoted in the SCMP / "Rents for luxury homes fall as demand weakens" - Pg.P1


"Overall luxury residential rents dropped by 3.3 percent last year, with the South Side and the Peak recording sharper falls of up to 3.3 percent."

"This is in line with the rental brackets of HK$100,000-plus per month, which have been most effected. The very-high-end sector offered at HK$300,000-plus is really feeling the decline, with stocks remaining vacant for several months if landlords are not willing to lower the rentals," she said.


Main Reason for the fall:

+ A drop in the number of expat families coming to HK, particularly for the financial services sector

+ More high-end luxury stock entering the market due to stagnant sales

Not only are people moving away from HK Island, so are the jobs


Companies looking beyond Central in Coming Years - SCMP headline


+ HK looks to be preparing for a stage of extreme transformation

+ The arrival of many new co's from China could be a big change

+ Up to a dozen mainland banks are said to be looking to set up offices in HK

+ More second tier banks will follow

+ Central has a dearth of available space for these new arrivals


HK East could be a beneficiary, and so could Kowloon East, in the longer term


It seems likely that those new mainland banks may be less willing to hire European and American expats, than the banks from their own countries

Another factor on the demand side is expats who simply don't come to HK at all - opting to move to Singapore (more space, cleaner air) or Shanghai (far more opportunities today than ten years ago).


This is nothing new, but we have to remember that HK is competing for both jobs (employers) and employees.

TI,

That's someone like Jim Rogers, who was considering both cities (he told me personally about 7 years ago), and he chose Singapore, because he thought it was healthier for his your family.


If Christine Loh is right about pollution falling, maybe we will see more of those expats in the future


What impresses me is the way that many young folks are coming to HK to get involved in start-ups. Maybe the govt should do more to encourage that

I've lived in both Shanghai (09-12) and HK (12-now) and the pollution in Shanghai is far worse than HK. Also most non-Asian expat families will not prefer Shanghai over HK unless they are out living in JinQiao. Shanghai is an interesting place but the quality of life there (by Western standards) is not even close to HK. If you visit it for a week you might be tricked into thinking it is as good (or better) but stay there long enough and you'll realize why HK is superior (and likely always will be). The primary thing HK has going against it is its moronic small house policy.

What alternative does HK have to its:

"moronic small house policy", L?


Do you prefer the "large suburban home" living arrangement in the US?


It may have seemed sensible when the US was the leading industrial power, and gasoline prices were below 20 cents a gallon. But today, it looks like a disaster.


As J H Kunstler has (sagely) said:

"The American Suburbs were the largest mal-investment in History"


= x =


You can see this clearly has Hong kongers enjoy mostly a first-world living standard, and America is rapidly headed towards third world status.

@ Lucane01 - agree completely on Shanghai. I would never choose to live there over Hong Kong. Most of the people I know who are going there are singles or Dinkies.


@ OffThePeak - one of the best things HK could do is abolish low rise housing (especially the massively damaging land gifts to indigenous NT people) - this will make public transport more efficient and reduce the destruction of public parks and farm land.

I'm not interested in getting into that discussion and my comment did not suggest I was advocating for (or against) suburban sprawl. Look at Singapore - less space, bigger homes, no suburbia. Look at Manhattan, small space, lots of people, big homes.


HK has tiny homes because its government dictates it to have small houses - there is nothing economically or geographically that forces HK to have tiny homes, it is pure government dictate. New Territories is wide open green space, Lantau island wide open green space, miles upon miles of unused coastline around the entire city that could easily be landfilled in. They landfilled in the northern side of HKI to create nearly all of the development we see today - why cant they landfill in the east west and southern sides as well? People keep crying over the disappearing harbor - why not landfill eastern and western HKI then? Why not landfill the western side of Lantau along the giant Tung Chung MTR line so that the line gets more use and maybe one day can actually pay off its enormous construction costs? Kowloon is so crowded and yet the government let that giant chunk of land, Kai Tak, empty for over a decade. And now what are they building there? Another port and a sports arena - brilliant.


Advocating for larger homes does not mean I want Detroit suburban sprawl - it means I want to not live in these tiny homes where I do not have enough room for the most basic of things. I don't like a kitchen that is so tiny that only one person can fit in it at a time. I don't like having bedrooms that are less wide than I am tall. These are moronic inconveniences that only exist because the government strictly controls residential development.


If HK went from average house size of 500 sqft up to 1000sqft it would give everyone a lot more living space and not require the suburban sprawl you greatly dislike. All it would involve is developing the New Territories or landfilling in wholly unused parts of the city.


Since this is a discussion of cheaper areas for expats, one thing Shanghai does have going for it is a more acceptable housing price. In JinQiao you can rent brand new European-style villas in a very nice green neighborhood at prices that would get an expat a 1000sqft mid-levels apartment. And in JinQiao your kids can ride their bikes around, walk to school, etc. Also living inside the mainland makes for easy weekend trips whereas the HK borders make for a bit more of an inconvenience.


I think what will be interesting is to see if HKers start moving to Shenzhen and commuting in to work everyday, especially once the XRL is built. Is SZ they can get bigger, newer, cheaper housing and yet still have the benefits of a work life in HK.

Lucane01,


I just can't see many HK'ers moving to Shenzhen and commuting. Maybe if HKD was 20% stronger than RMB it might be tempting, but why get paid in HKD and then spend a large chunk of that in RMB every month? I do though agree that Lantau is likely to increase in popularity.

"If HK went from average house size of 500 sqft up to 1000sqft it would give everyone a lot more living space and not require the suburban sprawl you greatly dislike. All it would involve is developing the New Territories or landfilling in wholly unused parts of the city."


My friend just rented a newish 1350 sf / 3BR flat in TKO for $17,000 a month.

(that's $12.59 per sf, gross)


My girlfriend recently rented out her 400 sf / 2BR flat in TKT at $9,600 a month,

and that property is in a 38 year old building

(that's $24.00 per sf, gross)


How is this possible?

Location, location, location / time savings for the smaller flat


The journey time from door-to-office in the TKT flat is just under 20 minutes to the office in Central, and just over 45 minutes from door-to-Central in TKO (if you get lucky with the MTR.)


The point is : The choice for larger flats and cheaper flats is available, but HK people consistently choose convenience over space, when they have the choice. When offices spread out from Central to new CBD's there will be more people choosing those cheaper bigger flats. Or retirees, like my friend in TKO, who owns a flat in a more convenient location, and rents it out for twice the rent he will be paying.

ticktock,


Why does the HKD need to be stronger before it makes sense to live in China and commute to HK? It is already far cheaper to live on the mainland than in HK. Housing is much cheaper (which is a person's primary expense), food is cheaper, restaurants are cheaper, utilities are cheaper and transportation is cheaper. Daily use goods, entertainment and private vehicles are about equally priced. The only things more expensive in China than HK are luxury goods and imported brand products - but an HKer can just stock up on their Gucci in HK and ferry it back to their SZ home.


The reason people aren't already doing this is because the border crossing is currently too onerous. But if the XRL is designed with no-queue border crossing (electronic on all sides) then it easily could be used for daily work commute. People in Manhattan already do this every day and have done so for decades - live 1hr away (by train) in Connecticut [or 30-45 minutes away in New Jersey] but commute to work every day. The train pulls them right into Grand Central where they can then easily transfer to the subway system. This appears to be what the XRL is setup to do.


Chinese government is also likely to strongly welcome this action because it further integrates the two communities living together.

If you don't value the time lost very highly,

and are willing to subject yourself to Chinese taxes, then you can live in Shenzhen.


Personally, I think TKO or Tung Chung would be far better options