M A R K E T W A T C HInformation from Cartus on Relocation and International Assignment Trends and Practices.

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Information from Cartus on the residential leasing market in Hong Kong for Quarter 3 2012

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Source: Ratings & Valuation Dept, Government of HK SAR

Source: Ratings & Valuation Dept, Government of HK SAR

Market review The third quarter saw little change in the overall market outlook. Demand for high-end luxury homes is still low and the third quarter has been relatively slow in the residential leasing market compared to previous years. Small to medium size units in the budget range of HK$50,000 to HK$80,000 have been the most active, and again it has been the Mid-Levels and Southside that saw the most activity.

Rentals across the board saw marginal movement reflecting the market as a whole. Hong Kong Island saw the most positive market outlook with units up to 1,000 square foot seeing an average increase of slightly above 4%. The Kowloon market saw rentals retreat across the board from between 3.7% to 6% as the historical attraction of Hong Kong Island continues to be strong, particularly for the newly arrived expatriates. Properties in Sai

Kung and Clearwater bay saw an increase in demand as parents look to take advantage of the attractive rentals ahead of Hong Kong Academy’s move to Sai Kung in the Summer of 2013.

With the relatively slack market, some landlords like Eton Properties who own Queen’s Garden in the Mid-Levels, are taking the opportunity to offer re-modeled units to the market. The majority of the units in the complex have 3 bedrooms, but many families are seeking 4-bedroom options, so the landlord is now offering a 4-bedroom option that is proving an attractive draw, albeit it at a premium to a standard 3-bedroom unit. The re-modeling also offers new bathrooms, enhancing the overall product.

Serviced ApartmentsServiced apartment units continued to experience high levels of occupancy, with rates holding up strongly. This is particularly so for luxury units which have been seeing close to 100% occupancy. Companies should remain mindful of careful planning when seeking short-term options. Early bookings will help to ensure the property of choice has availability.

Average rent by Class up to end September 2012

Average rent by Class up to end September 2012

© 2012 Cartus Corporation. All rights reserved. Cartus and the Cartus logo are pending or registered trademarks of Cartus Corporation.Sources: Ratings & valuation Dept, Government of HK SAR, Hong Kong Monetary Authority.The information provided in this Market Watch publication is provided in good faith but is not intended to provide specific advice or to take the place of either written law or regulations. Cartus does not guarantee the accuracy or endorse any of the views or opinions given by any third parties and accepts no liability for the data and information included within.

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Market outlookThe fourth quarter is likely to see a continuation of slower rentals across the board. There is little hope that the first half of 2013 will see any significant change, with many financial institutions either continuing to reduce headcount or maintaining the status quo. Financial concerns in North America and Europe are still lingering, and as property sales in Hong Kong continue to fall, there is a possibility that more residential units could be put on the leasing market. Unless sales prices drop significantly, yields are looking less attractive for investment purposes, so landlords will probably choose to hold rather than sell units.

In the first quarter of 2013, Marinella overlooking the Aberdeen Marina Club, will be launched in the market. This project offers some exclusive homes for those looking to live on the

Southside of Hong Kong, yet be within close proximity of the main business districts of Hong Kong Island.

key FiguresThe Hong Kong Monetary Authority announced that as of the end of September, there were no Residential Mortgage Loans (RMLs) in negative equity due to rising property prices. At the end of the second quarter there were 5 cases of negative equity with a value of HK$16 million.

New mortgage loans priced with reference to best lending rates increased to 94.4% from 93% in June, with the majority priced within the range of 2% and 2.25%. New mortgage loans priced with reference to HIboR decreased from 4.3% in June to 2.9% in September.