An influx of job seekers from mainland China is driving Hong Kong rental prices higher, bringing them back to their pre-pandemic levels in 2019.

According to data from Midland Realty, residential rents in Hong Kong have been climbing for three consecutive months as of the end of May. This resurgence in the rental market is providing a significant boost to the overall real estate sector, which remains sluggish.

The most notable rent increases have occurred in areas traditionally favored by mainland tenants. Data from Greater Bay Area real estate agency Spacious indicates that rents in West Kowloon rose by 12% in May compared to the previous year, significantly higher than the 4.2% average increase across Hong Kong. West Kowloon, known for its high-end residences and proximity to a high-speed rail station connecting to the mainland, has unique appeal to newcomers from mainland China.

The surge in mainland talent moving to Hong Kong is closely linked to the Hong Kong government's "Top Talent Pass Scheme" launched at the end of 2022. According to government data disclosed in March, over 72,000 applications had been received by the end of February, with nearly 59,000 approved and around 44,000 individuals already in Hong Kong. Including those approved through other talent admission schemes, approximately 108,000 individuals have arrived since last year.

Official data also shows that the median monthly income of those employed under the Top Talent Pass Scheme is around HKD 50,000, significantly higher than Hong Kong's overall median income of HKD 20,000. About 25% of these new arrivals earn HKD 100,000 or more per month, with roughly 10% earning HKD 200,000 or more monthly. This indicates that new mainland talent generally possesses substantial economic strength and higher rental budgets.

James Fisher, COO of Spacious, told the media that Hong Kong's economic recovery is also invigorating the rental market. He believes that the revival of industries such as aviation, hospitality, food and beverage, and retail is creating more job opportunities in the city.

However, Hong Kong's property sales market remains weak. High interest rates are deterring many potential buyers, leading to a 28% month-on-month decline in transaction volume in May. This situation indirectly boosts rental demand as more people choose to rent rather than buy property temporarily.