Return of overseas hires meets tighter supply, driving up Hong Kong luxury rents

Rents in Hong Kong’s luxury housing market are rising as supply tightens, with returning overseas professionals heating up the competition to secure prime homes. The rebound is most evident in traditional upscale districts such as The Peak and Southside, where leasing activity has picked up sharply this year. Transactions reached 108 in the first quarter, with more than 40 per cent involving monthly rents above HK$100,000 (US$12,760), according to Midland Realty. At the centre of the surge is Repulse Bay. The area has long been favoured by expatriate families for its proximity to international schools, larger flats and quieter coastal setting, making it one of the city’s most established enclaves for overseas professionals. The Repulse Bay development is one of the largest landlords in the area, operated by The Hongkong and Shanghai Hotels. It offers more than 400 units, typically ranging from 2,000 to 3,000 sq ft. “Demand began picking up in March and is now the strongest since the pandemic,” said Irene Lee, director of residential leasing at the complex. That rebound has quickly translated into bidding pressure. “We released nine units and received about 30 offers,” Lee said. “The final rents were about 10 per cent above our asking prices.” The competition reflects not just returning demand, but a shortage of available units after several years of absorption by new tenant groups. Before 2019, expatriates were the dominant renters in Repulse Bay. Their departure during the pandemic led to rising vacancies, with occupancy at the development falling to about 78 per cent in 2022, according to the Hongkong and Shanghai Hotels annual report. In the years since, mainland Chinese tenants and local families have been steadily taking up leases, filling much of that gap. Occupancy rebounded to about 95 per cent in 2025, close to pre-pandemic levels of 96 per cent. As a result, fewer units are now available even as overseas professionals begin to return. “We saw many expatriates leaving with their luggage in 2022, as confidence in Hong Kong weakened and quarantine restrictions were still in place, but we are now seeing some of them returning,” Lee said. About 40 per cent of renters in The Repulse Bay are from Europe, the US and Australia, while mainland Chinese tenants account for roughly 30 per cent and local residents about 15 per cent, according to Midland Realty. The renewed inflow of international professionals is being driven by corporate expansion, said Ruth Benny, an education consultant who advises relocating families. “Families are relocating from a wide range of regions, including the US, Europe, Australia and the Middle East – and we haven’t seen this level of activity since around 2017 or 2018,” she said. “These are not the same people coming back, but new groups being brought in as companies grow their presence in Hong Kong.” Many of these families secure jobs before arranging schooling or housing, often leading to last-minute moves that intensify competition for both school places and rental homes. This dynamic is particularly evident near the Hong Kong International School, where leasing activity typically accelerates after admissions are confirmed. Nearby developments such as 127 Repulse Bay Road and The Lily are now largely fully occupied, according to agents. Pricing has responded quickly to the tighter conditions. Average monthly rents for listings in Repulse Bay rose to about HK$166,375 in the first quarter of 2026, up 28.2 per cent from HK$129,821 a year earlier, according to data from 28Hse. “Two years ago, tenants could still negotiate rents and secure rent-free periods,” said Alan Li, an agent at luxury real estate-focused Habitat Property. “Today, there is little room for negotiation.” The sharper rebound in prime districts stands in contrast to more moderate gains across the broader market. Rents for larger units of about 1,076 sq ft or more – a proxy for the luxury segment – were up about 6.6 per cent from two years earlier, according to the Rating and Valuation Department. In the overall market, residential rents rose to 200.8 in February from 200.7 in January and were about 4.6 per cent above their pre-pandemic level of 191.9 in February 2019, according to the private domestic rental indices from the Rating and Valuation Department. The gains have been supported by mainland Chinese demand under the Hong Kong government’s talent-admission schemes, as well as sustained leasing demand during the property downturn, when more households opted to rent rather than buy. Looking ahead, leasing activity on The Peak and Southside was likely to stay active, with well-located developments continuing to attract competing bids and supporting rental levels, said John Fong, Midland’s chief district sales director.