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News Release

Hong Kong

Jones Lang LaSalle: Serviced Apartments in High Demand as Corporates Revive Expansion Plans

As the economy revives and corporates resume their expansion plans, there is a rising trend for expatriates to relocate to Hong Kong, creating a strong leasing demand for the luxury residential sector including that for quality serviced apartments in Hong Kong, according to professional real estate services firm Jones Lang LaSalle.

In March 2010, Hong Kong saw a 15% y-o-y rise in the number of new families relocating into the city, primarily driven by the financial sector, and the trend is expected to extend into the second quarter.  The influx of new families coupled with the buoyant sales market has driven down vacancy levels, therefore rental and capital values in the luxury residential sector have risen an average of 4.8% and 8.1% respectively.

Anne-Marie Sage, Regional Director and Head of Residential Leasing and Relocation Services at Jones Lang LaSalle, said, “As the economy picks up and the business environment improves, corporates, multi-national companies in particular, start to resume their expansion plans, which serves as a source of luxury residential leasing demand including that of serviced apartments.  In fact, rentals for serviced apartments already rose by 6.7% in 2H09, and further went up 1.7% in 1Q10.”

In fact, the demand for luxury residential leasing, which is mainly driven by corporate expansion, synchronises with the trend of the office net take-up. In 1Q10, total net take-up in the office market was 906,198 sq ft, the highest level recorded in a quarter since 1Q08. 

Among the population of senior executives who enjoy housing benefits, 17% of them enjoy a monthly housing allowance ranging from HKD100,000 to over HKD250,000, all falling under the category of luxury residential in Hong Kong.  Of all the different business sectors in the city, the banking and finance industry appears to be the most generous in providing rental allowances to senior executives.

From now through 2012, supply for large and luxury residential units, which could come in as serviced or non-serviced apartments, will remain tight.  Nearly 76% of these units are located in Kowloon and New Territories, with only about 24%, or 1,505 units, on Hong Kong Island, making supply in this sector extremely precious.
Indeed, the future supply of serviced apartments is even thinner, with just under 250 units to be launched in 2010, all of which will be located on the Hong Kong Island.  While most of these serviced apartment units’ sizes range between 300 sq ft and 900 sq ft, The Lily at 129 Repulse Bay Road, which was just launched earlier in April, is the only serviced apartment that offers large units between 1,800 sq ft to 3,900 sq ft, making it truly a jewel in the crown.

William Lai, Jones Lang LaSalle’s Head of Property Management in Hong Kong, said, “Expatriate families newly located to Hong Kong or executives who enjoy a substantial housing allowance, serviced apartments are seen as their preferred choice.  Apart from the location and size, Serviced Apartment Management services is another key factor which differentiates high-quality serviced apartments from the rest as it could add great values for both tenants and landlords/investors.  For tenants, a professionally managed serviced apartment can allow them to enjoy hassle-free services in every aspect e.g. security, housekeeping, concierge, etc.  For landlords / investors, good property management can safeguard the quality of the properties and uplift the rental level.”

Looking ahead at the development of luxury residential and serviced apartments in 2010, Anne-Marie Sage commented, “With more and more new families relocating to Hong Kong and the luxury residential sector constantly under tight supply, we expect luxury residential rentals to continue to rise for the remainder of the year with a 15% rise overall by the end of year.  The relocation trend will also further push up the demand for serviced apartments, especially for the scarce pool which comes in large size, high quality and located on Hong Kong Island.”