Although rates of rental decline are showing signs of slowing, the market dynamics are similar to previous quarters with an absence of new arrivals and a reliance on local demand.

• All areas of Hong Kong Island, Kowloon and the New Territories recorded more modest rental declines compared with Q4/2020.
• The end of the school year in summer will be key for expats deciding whether to either leave or stay.
• Pockets of vacancy have been observed on Hong Kong Island as tenants relocate to cheaper areas.
• Townhouse rents saw a slight rebound of 0.2% after declining for seven consecutive quarters.
• In the serviced apartment market operators are having to compete with hotel long-stay packages as well as discounts from other operators.
• PRC and overseas demand should return once travel restrictions are relaxed in the second half.