The government reiterated, it expects 40,000 home completions this year – the highest in the last five years – and about 100,000 by 2025.
Residential rents in Hong Kong and Singapore remain close to parity after the gap shrank dramatically over the past five years, signifying the diverging fortunes of the rival Asian financial hubs, official data compiled by property consultancy CBRE showed.
In 2018, before Hong Kong was hit by an unprecedented wave of social unrest, the rental gulf between the two cities was as high as 82 per cent, with Hong Kong widely labelled as the world’s most unaffordable housing market.
That chasm has shrivelled to about 12.8 per cent in May, with average Singapore rents at US$3.80 per sq ft while in Hong Kong rents averaged US$4.28 per sq ft.
At one point – in the first quarter of the year – the gap had narrowed to as little as 6 per cent with rents in Singapore at about US$3.78 per square feet, nearly catching up with Hong Kong’s US$4 per sq ft.
There are a myriad of reasons why rents in Singapore and Hong Kong are near parity, industry experts say. In 2019, when Hong Kong saw violent anti-government protests, an estimated US$4 billion of capital moved to Singapore from the city, according to a Bloomberg report.
The outflows continued over the next three years with Hong Kong enforcing some of the strictest Covid-19 restrictions in the world, a factor which also hastened waves of emigration with both locals and expatriates relocating either temporarily or permanently.
Last year, Hong Kong’s population dropped 0.9 per cent to 7.33 million from 2021, according to government data released in February. It was the third straight year of population decline and the resultant diminished pool of tenants and homebuyers had an impact on the property market.
Meanwhile, Singapore’s stability and widely-praised management of the coronavirus pandemic further burnished its reputation as a premier business hub. Many businesses and professionals found Hong Kong’s pandemic curbs too restrictive and relocated to Singapore, which then saw higher rental demand.
Singapore’s prudent timing in reopening its economy in late 2022 was a “catalyst” for international workers’ return to the city, and demand for rental properties was further stoked by successive hikes in stamp duty rates which made property purchases more expensive, according to Knight Frank.
For the rest of the year, home rents in both Hong Kong and Singapore are likely to face upwards pressure, although Singapore rental increases could be moderated by higher property supply in a slowing economy. Still, full-year rents are forecast to rise by 5 per cent, said Tricia Song, head of research for Singapore and Southeast Asia at CBRE.
“For private homes, rents were essentially flat for the 10 years before 2022 due to oversupply and mediocre population growth,” Song said. “With future supply likely to be below historical average, higher property taxes and higher replacement costs, rents are unlikely to fall back to pre-Covid levels.”
Meanwhile, Hong Kong is expected to see sustained demand for rental properties as rising interest rates and heftier down-payment requirements make outright purchases expensive.
“The relatively large lump sum of down-payments is encouraging more young expats to opt for rental housing options,” said Rosanna Tang, executive director and head of research in Hong Kong at Cushman and Wakefield. “Given the rate hike environment coupled with uncertain global economic outlook, potential homebuyers may choose to stay on the sidelines and temporarily seek rental properties instead.”
Rents are forecast to rise by 5 per cent to 8 per cent this year, boosted by demand for housing from foreign talent and non-local students relocating to the city, Tang said.
