Hong Kong urged to end property controls

Business chiefs say the city's cooling measures are hitting mainland investment and in fact are ineffective in reducing record-high prices

PUBLISHED : Friday, 17 January, 2014, 1:10am
UPDATED : Friday, 17 January, 2014, 1:10am

Business leaders of top mainland firms urged Hong Kong to withdraw property curbs as part of an effort to make the city a more open society and push integration with the mainland economy.

Speaking at the Hong Kong Development Forum, they warned that the curbs - in place for more than 14 months - were a major hurdle that reduced mainlanders' interest in doing business in the city and were useless in cooling its sky-high property prices.

"The property curbs can only cure the symptoms, not the disease," said Lawrence Lau Juen-yee, the chairman of CIC International (Hong Kong), the Hong Kong branch of the mainland's sovereign wealth fund.

"What the city needs to do is to review its land-use policy and the key is to add land supply.

"The city should not just use 25 per cent of its total area for development, which would make ordinary people's lives even more difficult."

Companies and non-permanent resident buyers must pay a special 15 per cent tax if they buy property. The tax is on top of the regular stamp duty.

Chief Executive Leung Chun-ying's target is to increase the supply of housing over the next decade by 470,000 flats. But critics said it was too little to cool property prices.

The property curbs can only cure the symptoms, not the disease

Mary Ma, a managing partner at private equity firm Boyu Capital and non-executive director at the city's securities regulator, said there was evidence that mainland firms were not using the city as a window to invest overseas as much as they used to.

In the first nine months of last year, overseas direct investment in Hong Kong fell 12 per cent from a year earlier, she said.

"Beijing has been simplifying procedures to encourage companies to go abroad directly, providing them good credit support and even raising leverage ratio for some good firms," Ma said.

Shan Weijian, the chairman of private equity firm PAG, lashed out at the property policy, saying it reflected Hongkongers' mindset of remaining quite "suspicious" of the mainland.

"In fact, those property curbs are in particular targeted at mainland talents, as they are the major buyers of Hong Kong's luxury houses," he said. "New York and London are also international financial hubs, but do they have such measures?"

Shan said Hong Kong "should face the reality" and avoid this "short-sighted" policy.