Property rents in Kowloon rose by 4.5%

Are tenants veering away from the district?

On the demand side, Savills does not note any large expansion from the financial sector, where demand is largely flat.

According to a research note from Savills, however, that some new small- to medium-sized financial tenants have set up office in Hong Kong, which increases slightly the demand in the leasing market.

Demand from PRC finance firms is also driving the market at the top end.

In terms of budget bands, leasing activity is mainly in the range of HK$50,000 to HK$80,000 per month.

Here's more from Savills:

New residential developments, such as Azura in Mid-Levels, are gradually entering the market for lease which will gradually help to ease the tight stock situation.

In Kowloon, rents are supported by local families who are looking to traditional districts, e.g. Kowloon Station and Kowloon Tong.

Vacancy rates in these traditional areas are also falling as vacancies are being filled quickly. Rents in Kowloon rose by 4.5%.

Looking ahead, we expect that the leasing market has now bottomed out, and luxury apartment rents are likely to see 0% to 5% growth in 2015, supported by tighter availability.