Chartered Surveyors See Rents to Fall Due to Unstable Economy and Excessive Supply

Royal Institution of Chartered Surveyors
2009-03-25 11:23 680

RICS residential lettings survey Q4 2008

HONG KONG, March 24 /PRNewswire-Asia/ -- Rents dropped across the residential lettings sector as would-be-sellers continued to flood the rental market with unsellable properties, says the RICS Lettings Survey published recently.

Between the third and fourth quarters of 2008, the net balance of Chartered Surveyors reporting rises (rather than falls) in rents fell from -12 percent to -48 percent, the lowest level in the survey's history. The change has been most marked in London and the South. The net balance of surveyors reporting rises in rents for London houses fell from -53 percent to -71 percent while for flats, the balance fell from -33 percent to -76 percent. However the biggest turnaround was in the South West where the net balance of surveyors reporting rises in rents for houses plummeted from 0 percent to -73 percent. Equally, the balance of surveyors expecting further falls in rents was the most depressed reading since the survey began.

Surveyors are, however, still reporting that gross yields are rising although the net balance of just 10 is the lowest since the three months to January 2008. This implies that rental levels are not at present falling quite as fast as house prices.

Low levels of housing transactions may be contributing to an increased demand for rental property. 42 percent more Chartered Surveyors reported a rise than a fall in rental demand compared to 29 percent in the previous quarter.

But the survey suggests that the more powerful influence on the market is the rise in supply. The net balances of surveyors reporting new instructions to let both flats and houses (an indicator of supply) still remain firmly in positive territory. 46 percent and 53 percent more Chartered Surveyors reported a rise than a fall in new instructions to let flats and houses respectively. Surveyors report that frustrated vendors are placing their property on the market to let, as they have been unable to agree sales.

Mr. David Faulkner, Vice-Chairman of RICS Hong Kong, commented, "In the fourth quarter of 2008 and the early part of 2009, the Hong Kong luxury rental market witnesses a fall in demand as companies in the financial sector downsized and the previous rents became unaffordable. This has resulted in rents for luxury residential properties falling by 20% from mid-2008. Landlords who are offering attractive rents are securing tenants and activity in the rental market has increased since Chinese New Year, with a fall of only 5% so far in 2009. However, the market remains fragile and the location and facilities provided in a property are now very important in maintaining rental values."

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About RICS & RICS Asia

RICS (Royal Institution of Chartered Surveyors) is an independent professional body originally established in the UK by Royal Charter. Since 1868, RICS has been committed to setting and upholding the highest standards of excellence and integrity - providing impartial, authoritative advice on key issues affecting businesses and society. RICS is the worlds' leading qualification when it comes to professional standards in land, property and construction. With over 140,000 members globally, RICS represents, regulates and promotes the work of property professionals throughout 146 countries.

The RICS Asia supports a network of over 9,000 individual professionals across the Asia region with an objective to help develop the property and construction markets in these countries, by introducing professional standards, best practice and international experience. It promotes RICS and its members as the natural advisors on all property matters. It also ensures that services and career development opportunities are provided to members.

The RICS Asia region covers national associations and local groups locating in Brunei, Malaysia, Singapore, Thailand, The People's Republic of China and the SAR Hong Kong. It also has members working across the region such as Bangladesh, Bhutan, Burma/Myanmar, Cambodia, Indonesia, Japan, Kiribati, Laos PDR, Macao, Mongolia, Nepal, North Korea, South Korea, Taiwan, The Maldives, The Philippines, Timor East and Vietnam.

Designated contacts for Hong Kong media:

RICS Hong Kong Public Relations Representatives

Ms Katherine Chow / Ms Kate Kwan

Tel: +852-2372-0090

Fax: +852-2372-0490

Mobile: +852-9256-3223 / +852-9077-1337

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Source: Royal Institution of Chartered Surveyors
Keywords: Real Estate