The Hong Kong residential market has lost one of its most steady sources of tenants - mainland Chinese students - this summer, after most of the city's universities moved to online teaching for the coming semester amid the coronavirus pandemic.
Rents in some areas close to universities have dropped by about a third year on year. In Sha Tin, which usually caters to students of Chinese University, Baptist University and City University, mainland Chinese renters accounted for 20 per cent to 30 per cent of deals, said Derek Chan, head of research at Ricacorp Properties.
"In previous years, mainland students started looking for flats as early as May or June, because demand would be really high. But they are not coming this year," he said.
Overall rents in Hong Kong have fallen by 3.4 per cent since the coronavirus first hit the market in January, according to data by local brokerage Midland Realty, despite the average rent rising slightly over June and July. The average rent per square foot rose 0.8 per cent in July to HK$35.27 (US$4.6).
This modest recovery too might have been snapped by the third wave in Hong Kong, property agents said, a situation that will be exacerbated by the arrival of fewer students from mainland China. "We have lost 70 per cent of students tenants [in Tai Wai]," said Jason Kwok, a senior branch manager at Ricacorp. "The impact is huge."
A 668 sq ft three-bedroom flat at Festival City in Tai Wai - a development popular with students - was leased to a local family for HK$19,000 per month recently, according to Ricacorp's Kwok. Last year, the same flat was rented by mainland students for HK$28,000 a month.
Jason Hau, a branch manager at Centaline Property Agency in Sha Tin, said he had signed zero rental deals with mainland students this summer. In previous years, he usually signed 20 to 30 such deals.
As a result, landlords were offering generous concessions as they pivoted to the local market. This month, a 284 sq ft two-bedroom flat at City One Sha Tin was leased for HK$9,000 per month, Hau said, 21.7 per cent below the landlord's initial asking price. A 304 sq ft flat in the same residential complex was contracted for HK$9,000 a month as well, at an average rent per square foot of HK$29.6, Hau added.
Meanwhile, mainland students who had already signed leases before universities decided to shift their classes online were looking to sublet their accommodation.
Guo Sitian, a student from Chongqing in southwest China, who was admitted to a master's programme at the University of Hong Kong, paid two months' rent as deposit for a room in a flat in Sai Ying Pun in July. But when she learned that the university was switching to remote learning, Guo decided to stay at home and found another HKU student to take over her lease.
"I know some friends [from the mainland] who had also rented flats and then decided not to come to Hong Kong. But some of them can't find other tenants to sublet to," she said.
In Tseung Kwan O, where student accommodation accounts for 5 per cent to 10 per cent of the rental market, the availability of a new project, Malibu, which is part of Lohas Park's phase 5, has added to an already abundant supply of flats.
"Rents in Tseung Kwan O have decreased this month, because Malibu has obtained its occupation permit, but the number of tenants is decreasing amid the pandemic," said Kenny Lam, a branch manager at Midland Realty.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.
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