Staff reporter

Despite rising unemployment rates, average rents in the housing market inched up in July, especially for new projects.

The average rental indices in Hong Kong's residential market rose 0.6 percent month on month, the latest data from the ratings and valuation department showed.

The rental yield of new projects ranged between 2.3 and 2.9 percent. Small and medium flats in new projects with monthly rent levels of below HK$20,000 proved popular.

Hong Kong Property Services (Agency) chief executive Richard Lee Chi-shing said property prices have dropped during the city's third wave of local Covid-19 infections.

As a result, those with sufficient capital may use this opportunity to purchase a second flat for investment.

He also said that rents in new projects have recorded a slight increase, meaning rental income may better compensate for mortgage repayments.

Residential properties are relatively strong hedges, Lee added, so investors tend to buy flats for long-term rental income.

Rents in Kai Tak, an area that has seen a significant number of new flats, have risen consistently.

Ricacorp Properties attributed this to improvements in the neighborhood's infrastructure, with the recent opening of a new MTR station.

The overall rental yield for the area was around 2.7 percent, the agency said.

A 349-square-foot unit at Vibe Centro in Kai Tak was rented out for HK$16,000 per month, or HK$46 per sq ft.

Based on the latest estimated property price of HK$7.54 million, the owner can expect to enjoy a 2.6 percent rental return.

In the same area, the monthly rent for a 336-sq-ft flat was HK$15,800, or HK$47 per sq ft. Based on the flat's market price of HK$6.4 million, the rental yield was 2.9 percent.

Centaline Property Agency said purchasing power has continued to improve with the virus situation and flat viewings have increased.

Tseung Kwan O recorded 510 rental transactions last month, a new high for the neighborhood.

Rental transactions were largely driven by an influx of flat leases for Malibu in Lohas Park, with 148 rental deals last month going for an average of HK$37 per sq ft.

A one-bedroom flat totaling 369 sq ft was rented out for HK$15,500 per month, or HK$42 per sq ft. Based on the flat's market price of HK$6.14 million, the rental yield was 3 percent.

Atop Nam Cheong station, Cullinan West also recorded good rental returns, with Hong Kong Property Services saying the tenancy market is active for this new development.

A 350-sq-ft one-bedroom flat was originally offered for HK$18,000 per month, but was ultimately rented out for HK$17,500 per month, or HK$50 per sq ft.

Based on the estimated market price of HK$7.8 million, the owner will enjoy a 2.8 percent rental return.

The Pak Shek Kok area in Tai Po also saw a resurgence in rents after a drop caused by an oversupply of new projects.

Centaline Property Agency said there is some rental demand for St Martin, with a one-bedroom unit totaling 381 sq ft rented for HK$13,500 per month, or HK$35 per sq ft.

Based on the flat's market price of HK$7.15 million, the rental yield was around 2.3 percent.

staff.reporter@singtaonewscorp.com

(The source:The standard)