The continued influx of talents into Hong Kong has led to a sustained rise in residential rents in the territory. According to the latest figures released by the Rating and Valuation Department (RVD), although Hong Kong's property prices have fallen for four months in a row, with a cumulative drop of 4.2%, rents have risen for seven months in a row, with a cumulative increase of 6.8%, and in August, they rose to 185.4 points, a month-on-month increase of 1.42%, which is a 3.5-year high.

Under the influence of interest rate hike, many people have switched from buying to renting after watching the market, and benefited from the Government's launch of a series of measures to grab talents, which has attracted a large number of overseas talents and even mainland professionals to Hong Kong, boosting the demand for housing in Hong Kong, thus causing the rental trend to go against the trend of property prices.

In fact, according to the data of the Rating and Valuation Department, in the first eight months of this year, rents in Hong Kong rose by a cumulative 5.6%, while the rise in property prices this year has nearly evaporated, with the rate of increase narrowing to 1.3%, and there is a fear that the whole year may reverse to the downside.

If compared with the historical high, the rental index in August was 185.4 points, 7.4% lower than the historical high of 200.1 points in August 2019. As for the property price index, it was reported at 339.2 points in August, comparing with the historical high of 398.1 points in September 2021, a sharp drop of 14.8%.

Rent increases accelerated more markedly at the start of the second half of the year, widening to 1.42% in August, the largest increase recorded since August 2016 (1.49%).

By unit type, rents for small and medium-sized flats (Classes A to C) rose by 1.45% month-on-month to the highest since February 2020, when they were last reported at 188.7 points. Rents for large flats (Classes D and E) rose by 0.34% month-on-month to 147.9 points.

Mr Chan Wing-kit, vice-chairman and president of the residential division of Centaline Property Asia Pacific, said that the market demand for rental properties was strong thanks to the Professionals Scheme. The fall in property prices has caused some buyers to switch from purchasing to renting, which has also created demand for leasing, leading to an increase in leasing transactions in recent months, forcing rents to rise. When interest rates stabilise and rental rates rise, investors will be attracted back to the property market.

The latest Centa-City Rental Index (CRI) rate of return for July 2023 was 2.69%, a 46-month, or nearly 4-year, high, and reaches the level of September 2019, a month-on-month increase of 0.07 percentage points, and a total of 0.16 percentage points for the fourth consecutive month of increase; reflecting the summer rental boom market, rents are rising steadily, but property prices are adjusting to a decline over the same period, directly pushing up rental returns.

Recently, rental properties are in demand, especially the supply of rare super-luxury properties on the Peak, and developers have also changed their position to switch from selling to renting.

It is learnt that DCH Properties (0088)'s super-luxury project at No. 3 Benji Road on the Peak has switched from selling to renting in recent years, and one of the houses, House E, with a usable area of 4,.432 sq ft, has been successfully rented out at a monthly rent of about $468,000, with the rent of a foot as high as $106, which is a desirable level.