A general view of the financial Central district in Hong Kong, China July 25, 2019. REUTERS/Tyrone Siu
HONG Kong has been competing hard with Singapore this year to reclaim its throne as Asia’s premier financial centre. It’s now offering generous tax exemptions to incentivise the ultra-rich to set up family offices in the city.
New immigration rules have been rushed out to attract the world’s brightest young college graduates.
While it’s a huge relief that Hong Kong is once again pro-growth, it does not have to go head-to-head with its rival on everything. Its stance on residential real estate, for one, must diverge.
Onerous taxation has been in place for more than a decade. Foreigners and second-home buyers have to pay an extra 15%, while those selling their apartments within three years face a levy of up to 20%. It’s time to phase these measures out.
The curb on property speculation has worked too well. Since the stamp duty on foreign purchases came into effect, transaction volume in the city has tanked.
The impact is especially felt in the primary market, where buyers from mainland China had at one point accounted for more than 40% of the total, according to Morgan Stanley estimates.
Hong Kong real estate in early 2012 was as sizzling as Singapore is now, but much has changed. In fact, it is starting to look a bit like another Chinese city.
Last month, Singapore’s home prices finally fell for the first time in three years, but only after the government doubled its stamp duty for foreign buyers to a whopping 60% in April. By comparison, apartment prices in Hong Kong are down 13% from their 2021 peak.
Granted, the government is tiptoeing away from its past draconian stance. Earlier this month, the Hong Kong Monetary Authority loosened maximum loan-to-value mortgage ratios for more expensive homes, its first easing since 2009. — Bloomberg
Shuli Ren writes for Bloomberg. The views expressed here are the writer’s own.
