This is borne out by the strengthening rental index for big homes – over 1,077 sq ft (100 square metres) – which has risen 2.7 per cent from January to March, the highest level since July 2022, according to data from the Rating and Valuation Department.

The Top Talent Pass Scheme announced by Chief Executive John Lee Ka-chiu in October to attract professionals and top graduates to the city has had the desired effect. As of mid-April, more than 60,000 applications had been received, with over 50 per cent of them being approved, Financial Secretary Paul Chan said on May 9. Among the successful applicants, a few hundred earned more than HK$10 million (US$1.27 million) a year.

Rents for houses on The Peak and in the Southern district will rise 3 to 6 per cent in the second half amid frequent leasing and limited supply, said Kenny Chung, the sales director for West Mid-Levels at Ricacorp Properties.

Aradhana Khemaney, the senior director and head of residential services at Savills, said leasing activity was brisk for flats and town houses on The Peak and Mid-Levels, with monthly rents ranging from HK$80,000 to HK$120,000.

“With strong leasing demand and momentum mainly driven by the relocation of mainlanders and foreigners in recent months, landlords are less flexible in negotiations,” she added.

Leasing activity for high-end property in the most desired areas of Hong Kong Island is on the rise. Transactions on The Peak and in the Southern district rose 8.1 per cent year on year to 120 in the first quarter, according to Centaline Property Agency. Among them was a 5,032 sq ft house at 11 Plantation Road, which was rented out at HK$580,000 per month in January, according to Savills.

New leases for upmarket homes on The Peak and in the Southern district rose to a six-month high of 47 in April, according to data from Midland Realty, which expects the numbers to rise further.

“We certainly expect rents to rise, and already across our portfolio rental growth since the reopening has been more than 10 per cent,” said Sachin Doshi, the founder and group CEO of Weave Living, which owns and operates rental accommodation units in Hong Kong and across the Asia-Pacific.

“Also on a relative basis, for many expat professionals who temporarily relocated overseas to places like Singapore, Hong Kong rents and cost of living are looking attractive again and we are seeing a reverse migration of this expat talent pool back to Hong Kong in a big way,” said Doshi.

Sai Ying Pun, Kennedy Town, Sheung Wan and Mid-Levels on Hong Kong Island were popular leasing areas, while Kowloon West and Tai Kok Tsui were preferred by expats and renters from the mainland.

“Recovery in leasing demand has been extremely rapid in Hong Kong after the Covid-19 restrictions were fully lifted, with a 50 to 60 per cent increase in inquiries over the second half of 2022,” said Doshi. “We see this demand continuing to accelerate as we go into the peak leasing period over the summer as the Top Talent Pass Scheme attracts more high-earning global talent.”

Not all market observers share the same enthusiasm, pointing to economic headwinds and a net loss of high-flying expats.

High-end rents will decline as demand is weak, said Koh Keng-shing, the founder and CEO of Landscope Realty, adding that the ultra-luxury segment may fare better because of limited supply.

“Expats have [seen] their housing budgets cut, some by up to 50 per cent,” said Koh. “Tenants from the mainland are just trickling, not in [hordes] as people had hoped for.”

He added that most businesses expect a full economic recovery in Hong Kong to be slow and gradual because of external factors such as high inflation, interest rates, the possibility of a recession in the US and slower-than-anticipated recovery in China.

Chen Hongtian’s US$86 million Frank Gehry-designed Hong Kong flat put up for sale

Hong Kong’s government, however, has forecast growth of 3.5 to 5.5 per cent this year after the gross domestic product contracted by 3.5 per cent last year.

Koh said he expects a 10 to 15 per cent drop in high-end rents, saying that he has observed that it was already down 15 per cent compared with a year ago.

Meanwhile, luxury rents in Singapore will rise 3 per cent in the first half from the fourth quarter, before flattening or softening by 1 per cent in the second half, said Alan Cheong, the executive director of research and consultancy at Savills in Singapore.

“Landlords in the luxury segment are now more realistic in their rental expectations,” said Cheong, adding that transactions in the high end segment had fallen this month and in April.