(Bloomberg) -- Hong Kong rents are rising again as overseas workers return, a recovery that contrasts with the cooling market in rival financial hub Singapore.

Hong Kong rents rebounded from their first-quarter decline to climb 2.8% in the second quarter of 2023, Knight Frank data show. While Singapore recorded the same pace of gains, growth in the latter city’s rents was the weakest since 2021, down from a recent peak rate of 8.6%, and the government expects rental pressures to ease further. 

The push to reverse a brain drain during the pandemic is encouraging new arrivals to target Hong Kong neighborhoods popular with professionals, such as Soho and Kennedy Town. In comparable districts in Singapore, growth rates are now about half that as stellar figures from previous years give way to relatively lackluster increases. 

The contrast in performance between rental markets in two of Asia’s prime financial hubs underscores Hong Kong’s path to recovery from the pandemic as people from overseas flow back into the city. Meantime, in Singapore, policy measures ahead of an election to tackle soaring property prices are starting to work.

“The trend is poised to persist, with Hong Kong’s rental market rebound affirming its resilience as a financial hub,” said Christine Li, head of research for Asia Pacific at Knight Frank. “Singapore’s decelerating rental market may offer relief to expatriates previously deterred by escalating rents.”


Hong Kong rents remain on average about 9% more expensive than Singapore’s, according to Knight Frank data. Hong Kong’s seen its strongest rental market since July 2018, said James Fisher, chief operating officer at real estate platform Spacious.hk, who expects rents to rise another 2% to 3% by the end of this year. Bloomberg Intelligence forecasts vacancy rates in residential units there to fall by December. 

“When there is not just one but several headwinds hitting the residential market, they may choose to rent,” Fisher said, alluding to the recent surge in interest rates on mortgages and the drop in sales.

Soho led the growth with a 5.5% increase from the first quarter, while Kennedy Town saw a 4.7% rise. In areas such as Repulse Bay, the beachside neighborhood favored by wealthy families, the lift was more muted. 

Singapore Cools

Singapore expects rental pressures to further ease in the coming quarters as more residential units are completed, the Ministry of National Development said in a written response to a parliamentary question on Monday. 

The city-state’s rental growth across mass-market to high-end apartments largely moderated between 1% and 3% last quarter, easing notably from increments of at least 9% recorded in the first quarter, according to Knight Frank data.

Rents in Singapore’s prime districts, typically favored by expatriates, have cooled. In District 9, home to the city’s upscale Orchard Road shopping strip, 800-square-foot (74 square meters) apartments are leased for around S$4,888 ($3,587) a month, data from OrangeTee & Tie show. Quarter-on-quarter rental growth for such properties dropped from 8% to 3% over the past year.

“Rental growth has slowed down across all districts,” said Christine Sun, senior vice president of research and analytics at OrangeTee & Tie. “Deals are taking longer to close as some level of price resistance has set in.”

(Updates with Singapore government’s comment in the ninth paragraph)

©2023 Bloomberg L.P.