The luxury residential market appeared to stabilize in Q2/2020, given that the epidemic has eased locally with reviving levels of economic activity and government agencies resuming work as normal.

• Luxury apartment rents fell in Q2/2020, with rents on Hong Kong Island, and in Kowloon and the New Territories down by 2.6%, 3.7% and 3.1% respectively.
• Expat and PRC demand was subdued due to the cross-border restrictions while local demand supported the luxury leasing market.
• Rents may fall further after cross-border restrictions are loosened later in the year as expats may be forced to leave as many firms are currently shedding staff and reducing their Hong Kong footprint.
• Townhouse rents recorded a fifth consecutive quarter of decline, registering a 2.3% decrease over Q2/2020. The rental gap between townhouses and apartments has narrowed.
• Rental falls in the serviced apartment sector slowed to 0.5% in Q2/2020 and rents are now down by 20.9% from their peak in Q2/2019. Serviced apartment occupancy continues to struggle along at 60% to 70%.
• Immigration statistics suggest that a smaller proportion of overseas and mainland professionals arriving in the territory are high-earning executives.