The Hong Kong government is scrapping an extra stamp duty levied on commercial property purchases in an effort to bring the lackluster market back to life.
The government would effective today abolish the additional duty for non-residential properties, Hong Kong Chief Executive Carrie Lam (林鄭月娥) said during a speech yesterday.
The levy of as much as 8.5 percent of a property’s value was introduced in 2013 to cool the overheated market.
Commercial deals would still be subject to a standard duty of up to 4.25 percent, she said.
On the residential front, the government would not change the mortgage measures and stamp duties for home transactions, Lam said.
The government has identified 330 hectares of land for 316,000 public housing units to satisfy demand for the next 10 years, Lam said.
Most of the land comes from reclamation in Tung Chung, a town on Lantau Island.
It is not the first time that the government has rolled out measures to stimulate real-estate transactions amid a recession and the COVID-19 pandemic.
Hong Kong’s central bank in August raised the loan-to-value ratio for commercial properties to 50 percent from 40 percent to allow buyers to borrow more money to purchase office, retail and industrial space.
The territory used to be one of the region’s most active markets. Deals often broke world records before the double whammy of anti-government protests and COVID-19 ground activity to a halt.
Hong Kong has seen its commercial property transactions slump by 62 percent since the beginning of the year from the same period last year, a report by Real Capital Analytics showed.
By comparison, the Asia-Pacific region posted a 31 percent drop in deals.
Hong Kong’s economy in the past few months showed signs of recovery from recession. Its GDP in the third quarter declined 3.4 percent from a year earlier, better than the median estimate of a 5.6 percent contraction in a Bloomberg survey of economists. The territory’s GDP in the third quarter rose 3 percent from the prior three months.
In the annual policy speech, Lam said that Hong Kong’s economy can benefit “from its proximity to the mainland and the central government’s long-standing support under the ‘one country, two systems’ principle.”
The territory’s “economic development will be given new impetus” by relations with China, she added.
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