Rents are falling a lot in Hong Kong it seems. Now it’s just HK$33.60 (RM17.80) per sq ft. As per this article in bloomberg.com Putting this into perspective, a 1,000 sq ft condo will be RM17.80 x 1000 = RM17,800 rental per month. I know, everyone wants to tell me that Hong Kong working people earn way higher than Malaysians. The below shows the average salary of Hong Kong working people. HK$16,884 = RM8,945 This is 2.8 times higher than Malaysian working people’s salary. They earn nearly 3 times higher pay than us. The image showing the numbers for Malaysia is right below Hong Kong’s. However, RM17,800 rental?
Property ownership is not just important for Hong Kong
This is why property ownership is so important because for Hong Kong, anyone renting will forever be under lots of financial pressure. This pressure will be forever because rental does not stop even when people stop working. This is why it’s uncommon for a Hong Kong couple to rent a 1,000 sq ft condo. Most of the time, a smaller place, say 300 sq ft would be a more affordable option. 300 sq ft x RM17.80 = RM5,340. Earning RM17,800 and a rental of RM5,340 = 30% of the salary. Looks much more logital and probable.
Now let’s look at an article about Hong Kong’s renters in bloomberg.com
Article in bloomberg.com Rents in one of the world’s most expensive real estate markets dropped to HK$33.60 ($4.33) per square foot in the first quarter, the lowest since the end of 2016, data from Centaline Property Agency Ltd. show. So a typical two-bedroom apartment in Soho now rents for about $3,500 a month, down from $4,200 two years ago, according to Spacious.hk online rentals.
The reasons for this include the following. Exodus of expatriates following anti-government protests, combined with a declining population and higher unemployment rate have led to sluggish rental demand in the Asian financial hub, even as purchase prices hold steady. Please do read the full article here: Article in bloomberg.com
We have two important things to take note from this falling rent
First is that even at the latest new rental rates, it’s plain to see that usually the more powerful side are the owners. Especially for owners who bought that unit many, many years ago. Current falling rental will not be enough to cause a loss. If we like a sign showing that it’s a huge loss to the owners, then look at the property price transactions trend. If it is also falling, then the owners may be suffering losses and is wiling to sell instead of holding. However, if property prices remain almost the same, then the owner continues to have holding power.
Second important thing to note is that property will always be one huge cause for poverty. It’s not just Hong Kong but in any major cities in the world, there will be a group which owns properties and another group which rents. The tenant group will continue to work very hard to pay rental and the the owners group will continue to take the rental and build wealth because of their decision earlier; to invest into properties. If we have learnt from Hong Kong’s experience, it’s time to act. Happy viewing. If you like to have steps to start, read below.
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