For any expatriate living in Hong Kong, it would be no surprise that the city has earned the dubious distinction of being the most expensive place in the world to rent a nice, if cramped, three bedroom apartment. What is key-catching is the gap by which Hong Kong takes the lead. As shown below, Hong Kong is 25% more expensive than Tokyo, 43% higher than New York, and 52% costlier than London. A US-expatriate taxed at 35% would need to earn almost US$220,000 per year just to have a decent roof overhead, never mind pay utilities or have a morsel to eat. Having a beachhead presence into China in a place where English is widely spoken and the rule of law still means something does not come cheap!
Many other countries create wealth at the top through a blessing of natural resources – oil, timber, coal, minerals, agriculture. Hong Kong’s prime wealth-creating commodity is its scarce land, which is sought after by a densely-packed, ambitious population, and sparingly dribbled out for development by a tycoon-influenced government. As I noted in an earlier posting, property development is responsible for creating sixteen Hong Kong billionaires and an untold number of 10+-millionaires.
| Monthly Rental for a Luxury | ||
| Three-Bedroom Apartment | ||
| City | US Dollars | |
| Hong Kong | $ 11,813 | |
| Tokyo | 9,445 | |
| Moscow | 8,441 | |
| New York | 8,281 | |
| London | 7,748 | |
| Caracas | 6,819 | |
| Geneva | 5,778 | |
| Bogota | 5,628 | |
| Singapore | 5,565 | |
| Lagos | 5,421 | |
| Zurich | 5,341 | |
| Rio | 5,241 | |
| Mumbai | 5,034 | |
| Seoul | 4,933 | |
| Sydney | 4,859 | |
Other than these stunning residential rental prices, it is also common to see street-level family restaurants and mass-market shops being replaced by MacLaren and Rolls Royce car dealerships, luxury brands and high end jewelers. These are increasingly the only retailers that can afford the lofty commercial rents.
Of course, Hong Kong’s property market is notoriously volatile, with prices and rents swinging by up to 50% between the high and low points in a cycle. These days, however, despite the world’s economic worries, it remains a case of “making hay while the sun shines” for Hong Kong’s landlords. And for the foreseeable future, the weather forecast seems to call for blue skies with occasional patches of clouds. So, as renters suffer from the bright and warm climate, there seems to be loads of hay piling up. At least the Jockey Club horses will be very well fed!
Details Here
NOTE: This posting is tangentially related to the posting on the 2012 Forbes List of Asian billionaires.
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