Expat housing packages are so 2012.
Long the golden privilege of the Hong Kong-based finance and banking crowd in Asia, the days of guaranteed housing allowances fat enough to rent a 4,000-square-foot harbor-view home on the Peak or a townhouse in exclusive Repulse Bay for HK$300,000 ($53,297) a month are gone. That perk is being slashed or eliminated, forcing expatriate finance types to give up marble Jacuzzis, private gardens and killer views in exchange for something humbler. And it’s putting a damper on the luxury rental market.
“We are seeing more downsizing,” said Maureen Mills, managing director of Executive Homes Hong Kong Ltd., a boutique real estate agency that works with law firms. “Partners used to have company leases and were happy to spend HK$150,000. Now with cash packages they are more comfortable at HK$80,000 to HK$100,000.”
In the first quarter of this year, only 7% of Jones Lang LaSalle Inc.’s expat real estate clients in Hong Kong were given monthly rental budgets of more than HK$100,000, down from 31% in 2012. Now, 54% of clients make do with less than HK$30,000 a month―enough for about two small bedrooms squished into 550 square feet in Central district―compared with 11% four years ago.
The number of finance clients with corporate packages moving to Hong Kong through JLL has halved, said Stella Abraham, head of the firm’s Hong Kong residential leasing and relocation services for companies including Citigroup Inc. and JPMorgan Chase & Co.
The downsizing trend is occurring against the backdrop of Hong Kong’s biggest property correction since the severe acute respiratory syndrome, or SARS, epidemic of 2003. After climbing 370% until their September peak, housing prices have since fallen about 14%. Analysts are predicting further declines of as much as 25% this year, which in turn will affect rents as leases come up for renewal.
Five years ago, when expat housing allowances were paid on a “use it or lose it” basis, agents had plenty of clients willing to spend as much as HK$300,000 a month. Now company-paid leases are out, and while salaries are adjusted to partially offset the missing housing allowances, employees no longer have an incentive to spend a king’s ransom on rent. Now they are more likely to content themselves with a two-bedroom, 1,320-square-foot apartment at the Hong Kong Parkview at HK$88,000 a month.
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Long the golden privilege of the Hong Kong-based finance and banking crowd in Asia, the days of guaranteed housing allowances fat enough to rent a 4,000-square-foot harbor-view home on the Peak or a townhouse in exclusive Repulse Bay for HK$300,000 ($53,297) a month are gone. That perk is being slashed or eliminated, forcing expatriate finance types to give up marble Jacuzzis, private gardens and killer views in exchange for something humbler. And it’s putting a damper on the luxury rental market.
“We are seeing more downsizing,” said Maureen Mills, managing director of Executive Homes Hong Kong Ltd., a boutique real estate agency that works with law firms. “Partners used to have company leases and were happy to spend HK$150,000. Now with cash packages they are more comfortable at HK$80,000 to HK$100,000.”
In the first quarter of this year, only 7% of Jones Lang LaSalle Inc.’s expat real estate clients in Hong Kong were given monthly rental budgets of more than HK$100,000, down from 31% in 2012. Now, 54% of clients make do with less than HK$30,000 a month―enough for about two small bedrooms squished into 550 square feet in Central district―compared with 11% four years ago.
The number of finance clients with corporate packages moving to Hong Kong through JLL has halved, said Stella Abraham, head of the firm’s Hong Kong residential leasing and relocation services for companies including Citigroup Inc. and JPMorgan Chase & Co.
The downsizing trend is occurring against the backdrop of Hong Kong’s biggest property correction since the severe acute respiratory syndrome, or SARS, epidemic of 2003. After climbing 370% until their September peak, housing prices have since fallen about 14%. Analysts are predicting further declines of as much as 25% this year, which in turn will affect rents as leases come up for renewal.
Five years ago, when expat housing allowances were paid on a “use it or lose it” basis, agents had plenty of clients willing to spend as much as HK$300,000 a month. Now company-paid leases are out, and while salaries are adjusted to partially offset the missing housing allowances, employees no longer have an incentive to spend a king’s ransom on rent. Now they are more likely to content themselves with a two-bedroom, 1,320-square-foot apartment at the Hong Kong Parkview at HK$88,000 a month.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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