High rent, little space: will Hong Kong’s housing market deter top talent from moving to the city?

New incentives to entice foreigners to move to Hong Kong could be undermined by rents that remain among the highest globally even after unrest and Covid-19

Some experts still see career opportunities and low taxes as big draws for the city

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Potential buyers at the sales office of Henderson Land-developed One Innovale at Mira Place, Tsim Sha Tsui, on January 8, 2023. Photo: SCMP/ Edmond So

Published: 8:30am, 30 Jan 2023Updated: 10:29am, 30 Jan 2023

Hong Kong’s astronomical housing rents are likely to be a concern among a certain segment of foreign talent looking to relocate to the city after the government formally launched an aggressive bid to reclaim its spot as Asia’s premier financial hub, according to analysts.

The city has offered a slew of incentives such as a refund of the extra stamp duty that non-locals pay when buying Hong Kong residential properties, as long as they remain in Hong Kong for seven years and obtain permanent residence. Other perks include a new two-year visa to individuals who earned no less than HK$2.5 million (US$319,200) in the past year and graduates of the world’s top 100 universities with at least three years’ working experience in the previous five years.

There is no limit for the number of visas that can be issued to people from these two groups. Another 10,000 visas per year will be available to those who graduated from a top-100 university in the past five years but have not yet worked for three years.

Just last year, Hong Kong was named the world’s most expensive city for expats, according to US-based consulting firm Mercer, taking into account expenses including housing, transport, food and entertainment. The question now is whether the new incentives offset the higher cost of living in the city, including home rents.

“The cost of living in Hong Kong is indeed quite high, even compared with other metropolitan cities. It certainly has a negative impact on attracting overseas talent to come to the city,” said Maggie Hu, assistant professor of real estate and finance at the Chinese University of Hong Kong. “(But) Hong Kong is a very vibrant city full of opportunities and attractions, which will, to a great extent, offset the concern about expensive rents.”

Until being hit by the one-two punch of social unrest and the Covid-19 pandemic, Hong Kong had consistently topped other global cities in terms of home rents. In 2020, for example, US$10,000 would get a tenant just 1,495 sq ft of space in the city, much smaller than the 2,249 sq ft in New York, 2,591 sq ft in Singapore and 2,899 sq ft in London, according to a report by Knight Frank.

Luxury home rents have since corrected with another decline by as much as 3 per cent expected this year, the property consultancy estimated.

The return of expats from mainland China and the rest of the world is widely perceived as a tonic to Hong Kong’s ailing property market, where office, retail and home rents have been in decline.