Hong Kong cuts stamp duty on some property

HONG KONG: The Hong Kong government is scrapping an extra stamp duty levied on commercial property purchases in an effort to bring the lackluster market back to life.

The government will abolish the additional duty for non-residential properties effective today, chief executive Carrie Lam said during a speech.

The levy of as much as 8.5% of a property’s value was introduced in 2013 to cool the overheated market.

Commercial deals will still be subject to a standard duty of up to 4.25%.

On the residential front, the government won’t change the mortgage measures and stamp duties for home transactions, Lam said.

The government has identified 330ha (815 acres) of land for 316,000 public housing units to satisfy demand for the next 10 years, according to Lam.

Most of the land comes from reclamation in Tung Chung, a town on Lantau Island.

It’s not the first time the government has rolled out measures to stimulate real estate transactions amid a recession and the pandemic.

In August, Hong Kong’s central bank raised the loan-to-value ratio for commercial properties to 50% from 40% to allow buyers to borrow more money to purchase office, retail and industrial space.

The city used to be one of the region’s most active markets.

Deals often broke world records before the double whammy of anti-government protests and Covid-19 ground activity to a halt.

Hong Kong has seen its commercial property transactions slump by 62% since the beginning of the year from the same period in 2019, according to a November report by Real Capital Analytics.

By comparison, the Asia-Pacific region posted a 31% drop in deals.

Hong Kong’s economy recently showed signs of recovery from recession.

Its gross domestic product declined 3.4% in the third quarter from a year earlier.

This is better than the median estimate of a 5.6% contraction in a Bloomberg survey of economists.

The city’s GDP rose 3% in the third quarter from the prior period. — Bloomberg

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