Wednesday, 24 September 2014

London More Expensive than HK?

Somehow London has overtaken Hong Kong as the most expensive place...
According to real estate firm Savills, London is now more expensive to live in than Hong Kong.

How could that possibly be?

Real estate costs per employee to rent residential and office space in London are $121,000 a year, while Hong Kong is not far behind at $115,717, and New York at $107,782.

"I don't think it's desirable necessarily to be the most expensive city to occupy, but on the other hand, you probably wouldn't be the most expensive city if you weren't also the most desirable," commented Yolande Barnes, director of world research at Savills.

Property prices in Britain have risen 18.4 percent in the past year, Savills said, and office rents have climbed sharply.

Meanwhile the report says Hong Kong is seeing residential rents falling as well as a weakening currency that resulted in the city losing the top spot for the past five years.

"Prime residential values have been hit hardest as cooling measures take effect, while rents are sliding due to weakening demand from the corporate sector," the report said. "In office markets, finance-focused Hong Kong has suffered as firms downsize and consolidate."

While rents fell in Hong Kong in the first quarter this year, they have since picked up, with average rents at 50 major housing estates hitting a record high in August, says Ricacorp Properties.

Nevertheless, Hong Kong is still the most expensive city to buy residential property, which is priced 40 percent higher than London.

Just yesterday a friend told me that her colleague, a young man in his early 30s with his wife had to pay six months' rent (at HK$15,000 a month) in advance in order to lease a flat in Tuen Mun. Tuen Mun! Not Mid-Levels, but out in the New Territories.

He was told that if he didn't have the money up front, the flat would be rented to someone else.

So the young couple somehow cobbled together HK$90,000 cash so that they could have a roof over their heads. The young man is only a contract worker, and I'm assuming his wife has a permanent job. How did they pay tax on top of that?, I asked. My friend said it's better to have somewhere to live first, then worry about tax later...

She has a point.

But six months' rent in advance in Tuen Mun?

Perhaps Savills should revise its report again... while property prices for luxury flats may be coming down, it's a really tight financial squeeze for the middle class who are just trying to get by...

2 comments:

  1. things will get worse if there are no change of direction re: CE, CCP and the real estate billionaires. I can see real estate prices similar to those in Shanghai where 3 generations of the couple (couple, their parents and grandparents[4]) have to combine their life savings in order to own the roof over the heads...

    a public estate flat at Tseung Kwan O 163 sq ft are priced at 2.45 million, translating to 13-15k/sq ft.

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    1. HI nulle -- Yes we're seeing everyone having to chip in to get some kind of housing...

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