Chase the schools to find a home in Hong KongJune 3, 2016 / By
While the final ringing of the school bell signals the start of the summer holidays for school children, for many expatriate parents living in Hong Kong, it signals the start of the home-search season. When searching for a new home, aside from the intrinsic qualities (i.e. size and layout), a key consideration is proximity to international schools within the city, which children of most expatriate families attend.
With that said, the city is seeing an ongoing shift in international school campus locations from expatriate-friendly areas on Hong Kong Island to the New Territories in the northern part of the city, where travelling time from the CBD can be over an hour depending on the time of the day.
In view of a projected shortfall in international school places for school years beyond 2016, the government has been pressing to allocate more sites to accommodate the establishment of new schools. In a city where land scarcity lies at the forefront of all discussions, the New Territories has become the location of choice to build these new schools, owing to the relative abundance of developable sites. In the most recent public bidding process open to international school operators for the development of new education centres (“School Allocation Exercise”), four of the five assigned sites were situated in the New Territories. Among the winners of the bidding process were operators affiliated with prestigious British boarding schools, including Malvern College and Shrewsbury International School.
So, will this wave of new international school openings over the next few years attract a greater number of expatriate families to relocate to the New Territories and benefit the housing market in those districts? We think yes, for the following reasons:
- Availability: The New Territories is anticipating the delivery of over 52,000 residential units from 2016 to 2020, which is roughly six times the amount that will be completed on Hong Kong Island over the same period. Accounting for about 2% of total supply, the availability of luxury units (usually more than 3 bedrooms) could provide expatriate families with a broader range of brand new, low-density options, many with close access to the natural environment, be it the hills or the shoreline.
- Cost: Rents in the New Territories have historically traded at a 45% discount to Hong Kong Island. Given the surge in supply over the next few years, homes in the New Territories should continue to offer viable and attractive rental value propositions, especially to expatriate families affected by the ongoing reduction in corporate housing budgets.
- Prestige: Some local families and holders of dual nationalities may follow the trend, as they may find acclaimed schools offering an international curriculum more appealing for their children, especially when enrollment in local schools can be equally, if not more competitive.
- Investment: The growing presence of international schools in the New Territories could potentially lift the appeal of investment homes against a stabilising rental market and improving occupancy levels, especially at a time when landlords are faced with increased uncertainties. Luxury yields, despite standing at just about 2%, are still higher than in other parts of Hong Kong.
In the rush to find a rental property before the sounding of the next school bell, the New Territories could be an interesting market to chase.
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