The serviced apartment market in Hong Kong has remained stable despite the global economic downturn, thanks to the continuous stream of foreigners who later decide to stay. In the luxury residential leasing market, the demand for serviced apartments softened in the first three months of this year.
The average rents of serviced apartments fell for the second consecutive quarter but at a slower pace, edging down 0.8 percent by the end of March compared with a drop of 2.8 percent in the last quarter of 2011.
However, rents were virtually stagnant in April and May.
Traditionally, May to July is the most active period for the market as families anticipate the opening of classes.
The increased inflow of expatriates at middle to senior management levels has translated to higher occupancy in two- to three-bedroom units.
In light of more inquiries for large rooms, corporate landlords offer less discount for two- to three-bedroom units.
The newly arrived expatriates are dominated by those from nonfinancial industries such as fashion, retail, chemical, IT and pharmaceutical companies.
Many are junior staff, making studio and one-bedroom units the most popular.
One of the major obstacles to a sustained influx of expats is the difficulty of finding places in high-quality international schools for their kids.
The lack of such schools coupled with high rents and commodity prices may deter senior-level employees from relocating to Hong Kong.
But so far the demand for serviced apartments outstrips supply and underpins overall rents.
While Europe's struggling economy will lead to slowing demand for serviced apartments as multinational companies remain cautious over hiring, Hong Kong's reputation as one of the world's leading financial centers and its buoyant labor market will continue to attract foreign talent.
In line with the luxury residential leasing market, serviced apartment rents are expected to undergo a mild decline of 4 percent over the next 12 months.
Cynthy Tang is a research and advisory analyst at Colliers International. The real estate consultancy has integrated teams of specialists to speed up success for institutional and private clients by developing solutions to give their properties a competitive business advantage.
E-mail: cynthy.tang@colliers.com
