HK investment plan likely to bolster capital inflow

The expansion of Hong Kong's investment-for-residency program to include investments in residential properties, as revealed in the chief executive's 2024 Policy Address, is expected to breathe new life into the city's wealth management by drawing wealthy individuals and facilitating capital inflow into luxury homes, experts said.

The New Capital Investment Entrant Scheme, which gives residency to people who invest HK$30 million ($3.86 million) in the city, started to allow investment in homes priced at HK$50 million or above to qualify from Wednesday. The amount of real estate investment to be counted toward the total is capped at HK$10 million.

Moreover, investments made via an eligible privately held company owned entirely by an applicant will be considered part of the applicant's qualifying investment with effect from next March.

The program was initially introduced in 2003 before being suspended in 2015. Chief Executive John Lee Ka-chiu announced its return last October.

Officially relaunched in March, the New Capital Investment Entrant Scheme requires applicants to put HK$3 million into a portfolio managed by the Hong Kong Investment Corp to support the local technology sector. Other eligible assets include stocks, debts, funds as well as industrial and commercial real estate.

An official from the Financial Services and the Treasury Bureau disclosed that by the end of September, the program had garnered close to 600 applications, from which 62 had been approved.

This expansion was implemented in response to the substantial demand exhibited by applicants for residential properties in Hong Kong, he added.

Following the relaxation of property cooling measures in February, including residential properties as qualified investments in the program is among a range of measures to bolster the city's real estate market.

Diao Zhihai, executive director of China International Capital Corp, said the move is expected to further attract high-net-worth and ultra-high-net-worth individuals to invest in luxury properties, potentially drawing global talent and forging significant capital agglomeration.

"This could positively contribute to Hong Kong's development as an international asset and wealth management center," Diao said.

Hong Kong's wealth management sector demonstrated resilience last year, with assets under management logging a modest growth of 2.1 percent year-on-year to above HK$31 trillion, said the Securities and Futures Commission. The city's net capital inflow surged more than 3.4-fold last year compared with 2022, thanks to the strong performance of private banking and private wealth businesses.

Raffles Family Office CEO Kwan Chi-man described the move as a "significant upgrade" that can attract a broader range of international capital and asset owners to Hong Kong, as it further enhances the program's appeal to wealthy individuals and families.

"Since the announcement of the relaunch last year, we've received numerous inquiries," Kwan said, pointing to Hong Kong's strategic location, low-tax environment and robust financial infrastructure. "The improvements are likely to turn interest into action, especially for those planning to establish family offices in Hong Kong."

evanliu@chinadailyhk.com