Hong Kong housing rents surge as overseas workers return, contrasting with cooling Singapore market


19th September 2023 – (Hong Kong) Hong Kong’s housing rental market is experiencing a revival as overseas workers flock back to the city, in stark contrast to the cooling market in rival financial hub Singapore. According to data from Knight Frank, Hong Kong rents rebounded from a decline in the first quarter and rose by 2.8% in the second quarter of 2023. Singapore recorded similar gains, but the growth in rents was the weakest since 2021, dropping from a recent peak rate of 8.6%. This divergence in performance highlights Hong Kong’s path to recovery from the pandemic, with an influx of overseas residents driving the rental market.

The push to reverse the brain drain of talent during the COVID-19 pandemic is encouraging new arrivals to target popular neighbourhoods in Hong Kong, such as Soho and Kennedy Town, known for their appeal among professionals. In comparison, Singapore’s rental market is experiencing relatively lacklustre growth rates in comparable districts, a significant departure from the stellar figures of previous years. Policy measures implemented in Singapore to tackle soaring property prices are beginning to take effect.

Christine Li, Head of Research for Asia-Pacific at Knight Frank, states that Hong Kong’s rental market rebound affirms its resilience as a financial hub, and the decelerating rental market in Singapore may provide relief to expatriates who were previously deterred by escalating rents. On average, Hong Kong rents remain approximately 9% more expensive than those in Singapore. James Fisher, Chief Operating Officer at real estate platform Spacious.hk, predicts a further 2% to 3% increase in rents in Hong Kong by the end of 2023. Bloomberg Intelligence forecasts a decrease in vacancy rates in residential units in Hong Kong by December.

Factors such as rising interest rates on mortgages and declining sales have prompted individuals to opt for renting in Hong Kong. Soho witnessed the highest growth with a 5.5% increase from the first quarter, followed by Kennedy Town with a 4.7% rise. However, in upscale neighbourhoods like Repulse Bay, favoured by affluent families, the growth was more subdued.

In Singapore, rental growth across various apartment segments, from mass-market to high-end, moderated between 1% and 3% in the last quarter, a notable decrease from the increments of at least 9% recorded in the first quarter, according to Knight Frank data. Expatriate-favored prime districts in Singapore have experienced a cooling effect. For instance, in District Nine, which is home to the prestigious Orchard Road shopping strip, 800 sq ft apartments are being leased for approximately US$4,888 per month, as reported by OrangeTee & Tie.

Overall, the rental growth across all districts in Singapore has slowed down, with deals taking longer to close due to price resistance. The contrasting trends in Hong Kong and Singapore’s rental markets reflect the impact of returning overseas workers on Hong Kong’s recovery, while Singapore implements measures to address property price surges.