Hong Kong Tenants Play ‘Hardball,’ Pushing Rents to 2-Year Low

bloomberg: "Raif Cabbabe said his property agent thought he was crazy to offer only HK$20,000 ($2,600) a month for a two-room apartment in Hong Kong’s trendy Soho district. The flat went on the market two months earlier for HK$45,000.

Bargaining for the 900-square-foot (84-square-meter) home worked. Cabbabe said he sealed the deal in November at HK$25,000 for the 2-year-old pad, which has a 250-square-foot terrace. Since then, prices have fallen further, with January capping six straight months of declines, according to data from real estate agency Centaline Property Agency Ltd.

“The property market has fallen off a cliff, so people are playing hardball now,” said Cabbabe, 28, a steel trader who moved to Hong Kong from Australia. “My friends renegotiating their rents are telling their landlords, we’ll just walk away if you don’t give us a discount.”

Rents began falling in the city in August, a month before the collapse of Lehman Brothers Holdings Inc. sparked off a global banking crisis. Home leases may fall as much as 15 percent to 20 percent this year, said analysts including Simon Lo at Colliers International Ltd. Hong Kong slid into its first recession since 2003 in the third quarter, leading companies to rein in costs by firing workers.

Unemployment in Hong Kong jumped 0.5 percentage points to 4.6 percent in the three months through January, the largest increase in a decade, as companies such as Citigroup, HSBC and PCCW Ltd. cut staff. Gross domestic product may shrink 2 percent to 3 percent in 2009, Financial Secretary John Tsang said yesterday. He said the government will refund taxes, suspend property rates and boost spending on infrastructure to mitigate the slump. "

FF: "Property market its time to fall, where banks including HSBC Holdings Plc and Citigroup Inc. have their head offices, dropped around 96 percent in March from a year earlier"