Hong Kong will expand a scheme to attract wealthy migrants who buy luxury homes, in a move seeking to bolster the city’s hub status and support the flagging real estate sector.
Chief Executive John Lee said he would broaden a migration programme to include some property purchases as part of the required HK$30 million ($5.05 million) investment. Purchases of homes valued at HK$50 million or above would fulfill a third of that requirement, he said in his annual policy address on Wednesday.
Hong Kong will also lower the amount of tax it levies on spirits to promote spending and boost the service industry, which has struggled as tourism and consumption have failed to recover from their pandemic slump.
Lee set his sights on boosting the economy after cementing Beijing’s authority over the former British colony with a national security law, a move Western governments criticised for muzzling open discussion in the Asia finance hub.
The migration plan, called the Capital Investment Entrant Scheme, was relaunched last year as the semi-autonomous Chinese city sought to attract talent and capital in the face of fierce competition from peers including Singapore.
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The initiative previously excluded residential real estate from qualified assets, which include a mandatory HK$3 million investment into a portfolio run by the Hong Kong Investment to support local innovation. The plan was expected to bring in HK$120 billion and 4,000 migrants annually, the government said in December.
The city’s economy has grown in the first six months within the official forecast range of 2.5% to 3.5% thanks to strong exports, although falling real estate prices and sluggish consumption have weighed on sentiment.
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China’s slowdown and geopolitical uncertainties also cast a cloud on Hong Kong’s growth outlook. The recent stimulus bonanza by Beijing, alongside the US Federal Reserve’s interest-rate cuts, may provide some relief.
To support the real estate market, Lee’s administration has over the past year removed most home purchase curbs and cut property buying taxes. Prices picked up slightly earlier this year before continuing a decline to the lowest since 2016.
A wave of bankruptcies points to eroding business finances. Retail sales and tourist arrivals remain below levels before the pandemic, a period that saw the city’s image take a hit from draconian quarantine measures and a crackdown on the pro-democracy political opposition.
Lee will look to attract more investors by revamping a HK$2 billion Innovation and Technology Venture Fund, according to the South China Morning Post.
The newspaper, citing unidentified sources, also reported additional measures to diversify the economy with measures including boosting the medical and biotechnology sector.
Charts: Bloomberg
