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Exploring Better Alternatives for Low Rental Yields

Updated: Nov 27, 2023

Hong Kong landlords have experienced persistently low net rental yields after factoring in taxes and property management fees. According to a JLL study, the average net yield for residential properties in Hong Kong declined from 3.1% in 2011 to 2.1% in 2022.

Rental income tax stands at 15% of (annual rental * 80%), and property management fees can range from 2% to 4% of the gross monthly rent.

Considering the choice between:

(a) a residential unit with a low single-digit return; and

(b) a residential MBS (a collection of home mortgages) with high single-digit yield.

Which alternative is preferable for landlords? The key assumption here is that Hong Kong property prices will remain at their current levels for an extended period.


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