Hong Kong is hoping it can help sell off the abundance of luxury homes lingering on the market with a new policy encouraging wealthy investors seeking residency to buy instead of rent.
Launched earlier this year, the New Capital Investment Entrant Scheme aims to attract affluent expats to settle and invest in Hong Kong. The scheme, Hong Kong’s version of a golden visa program, offers a path to permanent residency in exchange for maintaining an HK$30 million (US$3.86 million) investment in qualified assets for at least seven years. This includes HK$3 million invested in Hong Kong companies and projects.
Since mid-October, applicants to the scheme may invest in residential properties as part of their minimum investment threshold. If a single property’s transaction price is at least HK$50 million, up to HK$10 million of the investment can count toward the HK$30 million requirement.
The scheme, launched in March, had 600 applications by the end of September according to China Daily. This interest is expected to translate into purchases of luxury properties by high-net-worth and ultra-high-net-worth individuals, attracting a global pool of cash-rich investors to Hong Kong.
“Alongside end-users, there is growing interest from investors looking to capitalize on the luxury market for distressed sales opportunities,” said Martin Wong, senior director, research and consultancy for Greater China at Knight Frank.
Chen Zhuolin, chairman of Chinese property developer Agile Group, sold nine luxurious Hamburg Villa units this year at fire-sale prices. One sold in November for 63% less than he paid in 2018. Rare finds are coming to market as well, such as two units that recently sold at Opus Hong Kong, the Frank Gehry-designed building in the Mid-Levels neighborhood.
Savills reported earlier this year that “high deposit requirements and elevated interest rates, coupled with uncertain home-price prospects, pushed some cash-rich buyers” to become renters instead.
The Hong Kong central bank’s base interest rate is tied to the U.S. rate and likewise was at 5.75% earlier this year, its highest since 2007. It was 4.75% as of Dec. 19. The cuts this year were the first since 2020.
Chris Liem, owner and principal of Engel & Völkers Hong Kong, said the HK$50 million-plus focus for the investment scheme reduces effects on the broader, middle-class real estate market. Growing optimism is also driven by Hong Kong’s government announcing a relaxed loan-to-value ratio for mortgages, 70% regardless of value (meaning the bank can loan that percentage of the home’s worth.). Properties priced above HK$35 million previously faced a 60% maximum LTV.
Though news is mixed for Hong Kong’s luxury real estate, Wong sees resilience at the top of the market. He told Mansion Global that total super-luxury property transactions—those worth more than HK$78 million—reached 55 in the third-quarter of 2024, up 41% year over year.
Every major Hong Kong district has at least a few HK$50 million-plus properties that would qualify for the scheme, according to Liem. He said at that price point, buyers are seeking the right lifestyle fit more than simply trying to meet the financial threshold. The major elements of buying in Hong Kong are comfort, price and convenience, which for foreign buyers often means easy access to the MTR public transit network, he added. These districts offer luxury living options with different flavors and easy transit connections to the Central Business District, the airport and beyond.
Hong Kong agency Habitat Property describes Wong Chuk Hang as the city’s “answer to New York’s Meatpacking District, known for its light industrial, urban warehouse vibe.” On Hong Kong island just east of Aberdeen’s famous harbor, Wong Chuk Hang has taken on new life after the opening of the MTR south island train line in 2016, filling with galleries, restaurants and creative businesses.
Wong, of Knight Frank, said this area appeals to young professionals keen on new developments. “Many of these investors are very powerful buyers who do not need a mortgage and some even buy more than one property,” he said.
Savvy buyers have found deals at popular developments, including Blue Coast, La Marina and Southland. In October, a block of flats in Blue Coast II sold at 20% below development cost. An earlier release was also discounted to boost interest. Midland Realty reported that the most recent transaction at Southland was nearly HK$12,500 less per square foot than the average listing price, underscoring sellers’ willingness to negotiate.
According to Midland Realty, the most recent average sales price per square foot in Wong Chuk Hang/Sham Wan is HK$24,686. (Midland figures are as of Thursday.) It offers strong deal potential compared to the average price per square foot of HK$59,034 at the neighboring luxury district the Peak.Kai Tak
Until 1998, Kai Tak on the Kowloon peninsula was home to Hong Kong’s airport, but it’s now being redeveloped as a mixed-use district for an eventual 86,000 residents, full of green spaces and integrated with neighboring districts and Victoria Harbor. In 2020, an MTR station opened in Kai Tak, which was already within a short drive of the Central Business District and West Kowloon, an MTR station opened in Kai Tak.
Midland Realty reports an average listing price of HK$21,996 per square foot over the last 30 days, with HK$48,130 at the market’s top end. Wong said there is an ample supply in a variety of sizes and layouts in Kai Tak, all of which are newer builds. Leading projects include the Henley, Monaco and Pavilia Forest.
In October, Sun Hung Kai Properties sold out of units at its Cullinan Sky luxury development for three straight weeks. Prices rose in the final week between 5% to 8%. Wong feels the strong interest comes from the particulars of the project, including timing and developer quality. “The location of this project is also one of the best among other estates in the same area, as it’s closest to the Kai Tak MTR,” he said.
When it comes to properties just above the HK$50 million threshold, Hong Kong’s most desirable locations have tight supply, Liem said. One area where buyers can find overlooked luxury stock along the MTR line in his view, is Kowloon Station. Located in Tsim Tsa Tsui, a shopping and nightlife district in the south of West Kowloon, buyers seek residences in major luxury developments that tower over the city, including Hong Kong’s tallest residential complex, the 68-story Cullinan towers.
The area is ideal for commuters, connecting to China’s high-speed rail network and as an Airport Express station, including in-town check-in service.
The 33.5-acre Union Square mixed-use development puts shops and services within easy reach of luxury living. The area also offers easy access to the West Kowloon Cultural District, including M+, Hong Kong’s global museum of visual culture, and the art park with its harborside promenade.
According to Midland Realty, the average listing is HK$17,570 per square foot but buyers can still find ultra-luxury near Kowloon Station. In November, a lavish three-story penthouse at the Arch known as the “Emperor’s Home” sold as part of a six-unit bundle for HK$410 million. The properties, which were under receivership, sold for nearly 70% less than the 2021 asking price of HK$1.3 billion, according to the South China Morning Post.