New restrictions on speech and political activity in Hong Kong as a result of the Communist Party’s imposition of a Hong Kong version of the National Security Law in Hong Kong have led to social unrest in the city, undermining the attractiveness of living and working in Hong Kong as an international financial center, the withdrawal of expatriates originally working in the city and the mass migration of local residents, and a continued decline in Hong Kong rents.
Bloomberg reported on May 4 that Patrick Wong, a Bloomberg industry research analyst, said he expects Hong Kong rents could fall another 5% to 10% this year due to population decline and travel restrictions.
He said in the report that Hong Kong’s population fell 0.6 percent to 7.47 million last year and could decline further as the British government receives 27,000 BNO immigration applications.
In Hong Kong, a market with some of the world’s highest property prices, rents have fallen to HK$33.60 (US$4.33) per square foot in the first quarter, the lowest level since late 2016, according to Centaline Property.
Upscale properties in areas favored by Westerners and wealthy mainlanders, such as Mid-Levels and Deep Water Bay, saw the biggest drop, with rents falling by up to 25 percent from mid-2019, according to rental website Thousand Residences (Spacious.hk). In the same period, rents fell 20 percent in SoHo, a district in Sheung Wan favored by foreign students and young white-collar workers, where a typical two-bedroom apartment now rents for about $3,500 a month, compared with as much as $4,200 two years ago.
James Fisher, president of operations for Thousand Residences, said economic uncertainty and travel difficulties during the 2019 protest demonstrations drove down rents, and that the Communist Party virus epidemic and severe recession exacerbated weak demand.
According to the latest government data, rental yields have fallen to record lows in February. Large properties have been hit hardest, with rental yields for homes over 160 square meters (1,722 square feet) having fallen to 1.8 percent.
Hong Kong’s national security law comes into effect on June 30, 2020, causing many expatriates and Hong Kong residents to make the decision to leave the city.
Bay, who has been a financial recruiter in Hong Kong for 19 years, said, “It’s clear that with the security law in place, expat professionals are reconsidering the possibility of living in Hong Kong on a permanent basis.”
Some clients are even rushing to leave Hong Kong before their companies make such decisions, she said.
A July 2020 survey by the American Chamber of Commerce in Hong Kong (AmCham) showed that more than half of the 183 members who responded were considering leaving the city because of the Hong Kong version of the national security law.
David Webb, a leading Hong Kong securities and current affairs commentator, cited statistics from the Hong Kong Immigration Department that from July 1, 2020 to January 8, 2021, the net number of departures from Hong Kong will be 130,723, equivalent to 1.74% of the entire population. Among them, from December 1, 2020 to January 8, 2021, there will be 75,100 people leaving Hong Kong, equivalent to 1% of the population of Hong Kong.
In March, Reuters cited data from Canada’s anti-money laundering agency, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), which tracks transfers of more than C$10,000, and found that a total of C$43.6 billion (US$34.8 billion) was transferred from Hong Kong banks to Canada in 2020, which is the highest ever recorded by FINTRAC. the highest ever recorded by FINTRAC.
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