Hong Kong is introducing a temporary measure that will prevent rich expats buying property as a means of becoming resident.
As part of an attempt to cool soaring real estate prices that have jumped almost 50% since 2009, Hong Kong will stop offering residency to foreigners who buy property, officials said.
The government will temporarily remove real estate from its Capital Investment Entrant Scheme, which was set up to encourage foreigners to invest to gain residency.
Chief Executive Donald Tsang said in his annual policy address that the investment, net asset and net equity entry requirements for admission to Hong Kong under the Capital Investment Entrant Scheme have been increased.
After a review of the scheme, during which the government took into account overseas practices, changes in economic indicators, and the views of the public and Legislative Council members, the requirement is raised to HK$10 million from HK$6.5 million. In addition, real estate is suspended temporarily as a class of permissible investment assets under the Scheme.
Following the amendments, it was said that the Scheme remains competitive compared with similar overseas programmes. The investment threshold, net assets and net equity requirement will be reviewed every three years. The arrangement of the temporary suspension of real estate as a class will also be assessed at the next regular review, or earlier as necessary, Tsang said.
The amendments will not affect applications received before the commencement date, whether already approved or still being processed. Since the Scheme’s introduction, 8,200 investors with 15,500 dependants have been admitted to Hong Kong, bringing in HK$58 billon in investment.
Hong Kong, one of the Asian markets facing the biggest threat of a property bubble, has over the past year raised down payments, held more land auctions and lifted a stamp duty for luxury apartments to try to dampen surging prices.
At government land auctions over the past few months, transaction prices have exceeded market expectations, further fuelling worries of asset bubbles.