Hong Kong Real Estate Investment

Date:

Residence By Investment Options

Diversified Real Estate Investment for the Belt and Road

The Capital Investment Entrant Scheme was officially suspended on 15 January 2015. However, there are other alternatives for individuals who wish to apply for Hong Kong residence. These are:

  • The Quality Migrant Admission Scheme, which aims to attract highly skilled or talented persons who will settle in Hong Kong in order to enhance its economy, except nationals of Afghanistan, Cuba, Laos, Korea , Nepal, and Vietnam
  • The General Employment Policy, which sets out the entry requirements for persons who wish to enter or stay in the HKSAR for professional employment
  • Investment as Entrepreneurs, which is for persons who wish to enter or stay in the HKSAR in exchange for establishing or joining in business as entrepreneurs under the General Employment Policy
  • Bryan Cave Leighton Paisner Llp

    Bryan Cave Leighton Paisner LLP‘s real estate practice in Hong Kong has continued its upward trajectory in the market, and in a key development, it was strengthened by Ciarán Londra‘s relocation from London in January 2021. Institutional investor real estate M& A remains a core area of strength at the firm, which has successfully established itself as a ‘very strong player‘ in the REIT space, where it acts for funds and trustees. The firm is active in matters spanning the entire spectrum of commercial real estate assets, with one client highlighting its ‘excellent advice in the hospitality sector’, in particular.Andrew MacGeoch leads the team, which also includes ‘excellent‘ of counsel Ann Ho. The latter practitioner is noted for her ability to provide ‘very practical legal advice‘ across a range of investment and development issues.

    Practice head:

    The firm provides strong legal expertise in relation to real estate and hospitality projects.

    The team provides very practical legal advice.

    Ann Ho excellent in handling real estate projects and provides very practical legal advice which can safeguard the interest of client but at the same time does not overprotect the clients .

    Key clients

    HSBC Trust Services Limited

    Hardinge Inc.

    Vecima Networks Inc.

    Work highlights

    In Review: Real Estate Investment In Hong Kong

    All questions

    Foreign investment

    While there are generally no legal restrictions on foreign investors owning, selling, leasing and developing real estate in Hong Kong, it may be more difficult for foreign investors to obtain a mortgage in Hong Kong. In addition to the aforementioned new requirement by the Hong Kong Monetary Authority, mortgage insurance plans are generally unavailable to applicants whose income is mainly derived from outside Hong Kong, unless these applicants can demonstrate a close connection with Hong Kong. Furthermore, legal opinions may be required to confirm that the foreign corporate investor has legal power to enter into the transaction, to deal with and to execute the relevant documents involving the Hong Kong property this may impact transaction costs.

    Structuring the investment

    The structuring of an investment in real estate in Hong Kong will likely be based on tax and accounting considerations of the investor. It is therefore prudent to obtain advice on tax and accounting implications for the investor in both the investor’s own jurisdiction and in Hong Kong when investing in Hong Kong property. The availability of financing may also be a factor when determining the structure of the investment.

    An investor may also make use of a corporate offshore SPV, depending on regulatory and tax considerations. Popular jurisdictions for setting up offshore SPVs include the British Virgin Islands, the Cayman Islands and Bermuda.

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    Hong Kongs Rental Yields Remain Low Rents Mixed

    Hong Kongs extremely low rental yields can be attributed to the surge in property prices in recent years. Hong Kong is not a typical market. It is a place where the rich choose to park assets in the form of apartments, as part of a diversified asset-safeguard strategy – like Monaco and Singapore. Such markets typically have lower rental yields than more normal housing markets.

    Rental yields remain very low. In November 2021:

    • Property Class A rental yields were 2.4%, unchanged from a year ago.
    • Property Class B rental yields were also unchanged from a year earlier, at 2.2%.
    • Property Class C rental yields were 2.1%, slightly down from 2.2% a year earlier.
    • Property Class D rental yields were 2%, slightly down from 2.1% in November 2020.
    • Property Class E rental yields were 2.1%, slightly up from 2% a year earlier.

    Rents vary in Hong Kong, with slightly falling rents for smaller-sized apartments and rising rents for larger-sized apartments. In November 2021:

    • Rents for apartments smaller than 40 sq. m. fell slightly by 0.2% y-o-y, to an average of HK$ 430 per sq. m per month.
    • Rents for 40-69.9 sq. m. apartments rose by 2% y-o-y, to HK$ 399 per sq. m. per month.
    • Rents for 70-99.9 sq. m. apartments fell by 4.9% y-o-y, to HK$ 386 per sq. m. per month.
    • Rents for 100-159.9 sq. m. apartments rose by 6.1% y-o-y, to HK$ 437 per sq. m. per month.
    • Rents for apartments larger than 160 sq. m. rose by 5.8% y-o-y, HK$ 453 per sq. m. per month.

    Those Who Urgently Need To Sell Are Willing To Negotiate Prices

    Hong Kong property market lost its most important source of investment ...

    People looking to leave the city soon are more open to price negotiations, Lily Wong, a Hong Kong-based luxury property agent at OKAY.com with over 37 years of experience, told Insider.

    Sellers both expats and Hong Kong citizens looking to leave the city tend to have realistic asking prices. They are more likely to keep in line with the market price and the bank valuations, compared to sellers remaining in Hong Kong, she said.

    However, these price negotiations often depend on the seller’s urgency, Rosalyn Wong, an agent at Habitat Property, told Insider.

    “Some of my clients from Australia or the States are planning to go back home. They are sending their families back, so they’re more willing to drop their price because they are looking to sell within a short period of time, maybe two to three months,” she said.

    In one instance, a seller who had already moved back to England ended up selling her property for less than HK$12 million , despite her initial asking price of HK$13 million , Tam said.

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    Why You Should Not Invest In Hong Kong Real Estate In 2021

    Why you should not invest in Hong Kong real estate in 2021? That will be the topic of todays article.

    Whilst there are always positives and negatives associated with every investment, this article will explain some of the reasons why you shouldnt invest in the market.

    If you are looking to invest in more productive assets, dont hesitate to contact me, email or use the WhatsApp function below.

    Introduction

    The future of the Asian investment market was tempting promising until the COVID-19. This was exactly the region of the world, in which the transition from words to the case occurs without special pauses and long reflection.

    Today, any investor will be able to know in advance of all risks and income from the investments of its capital in Hong Kong and in China. Investigating a large cash in Asia can be a little risky in 2021. This blog post is intended to show you all the disadvantages you can face if you invest real estate in Hong Kong now.

    Hong Kong was always a reliable investment of capital. All roads were leading to Hong Kong.

    Hong Kong does not get tired of taking successful entrepreneurs who are carrying their capital here. The reason is simple, it lies in the one hundred percent success of almost any business being checked here. In Hong Kong, investments are invested in all industries, as this is a place where you can collect cream in all types of business. Investments done here are tomorrows income.

    How Was The Market Affected By The Covid

    Hong Kongs residential real estate market has remained surprisingly resilient as locals seek secure investment options during turbulent times.

    According to Knight Frank, the property market will still remain under pressure as unemployment rates have risen, and with an economy that is in a recession.

    The multinational believes that prices will decrease by around 5% in 2020, while we will start to see a recovery in 2021. It all depends on when the borders can open and when economies can start functioning properly again.

    With that said, the commercial real estate market has not been as resilient as the residential ditto. Shop rents and commercial real estate prices have continued to fall.

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    Is Buying Property In Hong Kong A Good Investment

    Having some of the lowest yields in the region and the most overvalued property markets in the world, Hong Kong is not an optimal investment destination at the moment.

    There are plenty of other cities in the region that offer higher yields and better investment opportunities.

    Theres a reason why Hong Kong has dropped in rankings recently, giving space for places like Singapore, Ho Chi Minh City, and Tokyo.

    The chance of a continuing downtrend is big when looking at historical data, the recent political unrest, the ongoing trade war between China and the US, and its slowing economy.

    That said, the market is resilient and prices havent dropped significantly. As late as 2018, the government issued a new stamp duty of 30% towards foreigners, but prices have remained stable and even increased.

    Many believe that the biggest threat to the Hong Kong Market is the global trade war between the US and China, which Hong Kongs economy highly relies on.

    Hong Kong acts as a middleman in international trade, which makes it the most vulnerable economy, as the trade ties get worse.

    This may make Hong Kong an unattractive market for some investors. My answer to the question of whether Hong Kong is a good place for real estate investments in 2021 is still No.

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    The General Employment Policy

    The General Employment Policy sets out the entry requirement for persons who wish to enter or stay in the HKSAR for employment as professionals. Applicants who possess special skills, knowledge, or experience of value not readily available in Hong Kong may apply to work under the GEP if the following criteria are met:

    • The applicant has a good education background, normally a first degree in a relevant field of employment
    • There is a genuine job vacancy
    • The applicant has a confirmed offer of employment and is employed in a job relevant to the academic qualifications or work experience that cannot be taken up by the local workforce
    • The remuneration package including income, accommodation, medical, or other fringe benefits is broadly commensurate with the prevailing market level for professionals in Hong Kong

    King & Wood Mallesons

    King & Wood Mallesons‘ real estate practice, which occupies a space within the banking and corporate departments, sees lawyers advise on a full range of cross-border matters. The varied workload includes real estate conveyancing, leasing, funds, M& A and capital markets transactions. The team advises clients on all manner of residential, commercial and industrial properties. Siu Ngor Chow excels in advising developers on residential and commercial project conveyancing. Hayden Flinn co-heads the group with Chow.

    Practice head:

    Urban Renewal Authority Union Score Investments Ltd

    Manful Global Development Ltd.

    LCLC3 Management Co Pte Ltd

    Shui On Land Limited

    KaiLong Investment Management Hong Kong Limited

    C& D Property Management Group Co., Ltd

    Guotai Junan Capital Limited

    Ronshine China Holdings Limited

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    Hong Kong Property Market Remains The Worlds Most Unaffordable

    Housing demand in Hong Kong has been propelled by a combination of stringent government regulations on development, low interest rates, and currency stability while the supply of land, which the government controls, continues to diminish.

    Hong Kongs currency peg to the dollar kept borrowing costs near record lows, fuelling continued property demand.

    How Much Are Property Taxes In Hong Kong

    Whats The Future Of Retail Real Estate in Hong Kong?

    Hong Kong property taxes are payable when either renting out or transferring your apartment. Taxes are high when compared to other housing markets in Asia as well.

    Every kind of real estate here is bought and sold on a leasehold basis. As a result, you are not required to pay annual tax on Hong Kong property if you arent making any income off it.

    On the other hand, a tax of 15% on the propertys rental income is payable if youre renting it out. A deduction for repairs and maintenance applies and the rate is always assumed as 20% of rental income. So effective taxes paid on rental income are around 12%.

    You must pay stamp duty if youre transferring real estate in Hong Kong too or I suppose its rather the rights to a lease.

    Property tax rates in Hong Kong vary widely based on whether youre foreign or a permanent resident, if you own other real estate in Hong Kong, the value of the property, and the amount of time youve owned it.

    In summary, stamp duty in Hong Kong can be as minimal as 1.5% of its total value or as high as 32%.

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    Top Property Management Companies In Hong Kong: A Complete Guide

    Hong Kong has some of the hottest real estate markets in the world, foreigners and mainland Chinese investors continue to push prices and property taxes to new sky-high levels.

    Commercial property is high in demand, especially in the central business district where rents are among the highest in the world.

    If you rent or plan to buy property in Hong Kong, you also need someone to maintain it for you. In this article, I present some of the biggest and most popular property management companies in Hong Kong.

    Hiring Real Estate Agents In Hong Kong

    Unlike many places in Asia, where locals prefer selling property based off referrals from family and friends to avoid paying a commission fee, real estate agents are commonly used in Hong Kong.

    Part of this is because of Hong Kongs high service standards and degree of internationalization in general. But perhaps the biggest reason is because of spectacularly high real estate values in the city.

    Real estate agents, as a result of Hong Kongs expensive market and low yields, can still make a living wage from a comparatively low commission fees. Taking 2% on multi-million dollar sales isnt a bad deal.

    The standard commission rate is indeed 2% with half paid by the buyer and the rest by sellers. In addition, the buyer must usually pay a deposit of 5% when signing the Sales and Purchase Agreement. Deposits are kept by the owner if the buyer backs out of the contract.

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    Hong Kongs Property Market In Previous Years

    Hong Kong has the most expensive property market in the world, outperforming places like Singapore and Sydney.

    Real estate prices have increased by double digits, making real estate inaccessible to many locals. As of 2020, houses averaged more than USD 1.2 million, which is kind of unbelievable.

    Looking at real price increases, in the second quarter of 2018, the year-on-year price increase was 13.5%, which was a bit higher than the price increase in the first quarter of 2018.

    At the same time, the average sales value per transaction increased by 8.4%, according to Colliers.

    Colliers also reported that the supply of residential units increased by 12% in 2018 compared to 2017. The luxury residential rents increased by 4% in 2018.

    Nowadays, you can buy a 10-bedroom house in many European countries for the same price as a 28 square meter apartment in Hong Kong. Besides, the average price per square meter in Ho Chi Minh City is only 14% of that in Hong Kong.

    Hong Kong Property Prices in 2019

    Looking at real price levels, the average price per square meter was around USD 22,507 in April 2019. That was almost twice as much as Singapores average of around USD 11,442.

    Prices have grown strongly for over a decade, except for a brief slump in 2016 due to the mortgage rate hike. We also saw price decreases during the second half of 2018 and 2019. The Centa-City Leading Index CCL shows the price increases from 1996 August 2019, which speaks for itself.

    The Market Slowed Down in 2019

    Keelan Chapman Director & Founder

    Why real estate investors are flocking to Singapore | CNBC Reports

    Keelan is the founder and manager of the Canadian Real Estate Investment Centre in Hong Kong -CREIC . He is a registered licensee with the British Columbia Real Estate Association and licensed with Macdonald Realty, a long-established real estate brokerage in British Columbia, Canada. Keelan has established partnerships with various real estate professionals across Canadas major cities providing a broad base of professional services.

    Keelan graduated from McGill University in Montreal with a Bachelor of Arts in Geography and Chinese. He is an Executive Committee member of the Canadian Chamber of Commerce in Hong Kong and a founding member of the Canadian Chamber of Commerce in the Pearl River Delta.

    Outside of the business world, Keelan plays rugby semi-professionally for the Hong Kong Football Club and for the Hong Kong national team.

    Keelan is fluent in English and French, and intermediate in Mandarin.

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    Sunny Liu Property Consultant

    Sunny looks after our property consulting, client advisory and client services. Previously, he held various positions in multiple real estate developers covering property investment, asset management, client advising and leasing.

    Sunny graduated from the University of Hong Kong with a Master of Science in Real Estate and received his Bachelor of Business Administration from the Chinese University of Hong Kong.

    Sunny is fluent in English, Cantonese, and Mandarin.

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