HONG KONG • Expat housing packages are so 2012. Long the golden privilege of the Hong Kong-based finance and banking crowd in Asia, the days of guaranteed housing allowances fat enough to rent a 4,000 sq ft harbour-view home on the Peak or a townhouse in exclusive Repulse Bay for HK$300,000 (S$53,400) a month are gone.
And it is putting a damper on the luxury rental market. In the first quarter of this year, only 7 per cent of Jones Lang LaSalle's expat real estate clients in Hong Kong were given monthly rental budgets of more than HK$100,000, down from 31 per cent in 2012.
Now, 54 per cent of clients make do with less than HK$30,000 a month, enough for about two small bedrooms squished into 550 sq ft in Central district, compared with 11 per cent four years ago.
The number of finance clients with corporate packages moving to Hong Kong through JLL has halved, said Ms Stella Abraham, head of the firm's Hong Kong residential leasing and relocation services for companies, including Citigroup and JPMorgan Chase.
After climbing 370 per cent until their September peak, housing prices have since fallen about 14 per cent. Analysts are predicting further declines of as much as 25 per cent this year, which in turn will affect rents as leases come up for renewal.
Now tenants are more likely to content themselves with a two-bedroom, 1,320 sq ft apartment at the Hong Kong Parkview at HK$88,000 a month.
Worst-affected are high-end properties like The Mount Austin atop Victoria Peak. A few years ago, landlord Nan Fung Development had no trouble finding expats willing to shell out HK$280,000 a month for a 3,787 sq ft duplex.
Today, however, property agents say they are lucky to even get interest, let alone find tenants.
"People cannot afford to pay so much any more," said director of the Hong Kong market at Landscope Christie's International Real Estate, Walker Lam.
After more than a decade of steady rental increases, luxury landlords are now looking at reductions of as much as 30 per cent for properties at the very top of the market, Lam said.
Some developers are also quietly providing other inducements, such as a month free. It is increasingly common for companies to replace expat packages with quasi-local ones that include a subsidy for housing.
These "permanent transfer" relocations for a middle manager position might include HK$30,000 for a single person and HK$70,000 for a family, said regional director at human resources consultancy ECA International Lee Quane.
"You do see downsizing, but houses on the Peak still have people," said Mr Harry O'Neill, a partner at recruitment firm Heidrick & Struggles International. "They just aren't bankers."