Hong Kong Reintroduces Real Estate Component to CIES

Moustafa Daly
Cairo

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Hong Kong has announced a significant update to its Capital Investment Entrant Scheme (CIES), reintroducing real estate as a qualifying asset for residency by investment.

Chief Executive John Lee unveiled this policy change in his annual address on Wednesday, October 16, 2024, as part of a broader strategy to attract high-net-worth individuals and stimulate the property market.

The CIES, which attracted 500 applications within only six months of its recent relaunch, will soon allow applicants to include residential properties valued at HK$50 million (US$6.4 million) or above as part of the required HK$30 million (US$3.9 million) investment threshold.

Up to HK$10 million (US$1.3 million) of the property value can count towards the investment requirement, bringing the total foreigners would have to invest to include a real estate component to HK$60 million (US$7.7 million).

“The announcement of the revised (CIES) emphasizes a more flexible investment approach for obtaining residency,” says Siren Chen, Group Head of Project R&D at Globevisa Group.

She says his new structure will make Hong Kong more attractive than destinations with stricter or less flexible requirements, but cautions that “the high property prices in Hong Kong could still be a barrier for some investors.”

Reintroducing Real Estate to CIES in a Broader Context

Hong Kong had scrapped the previous version of the CIES in 2015, citing hikes in property prices as one of the main reasons.

Now, Hong Kong faces an economic slowdown in China, one of its main FDI markets, and a stagnant housing market. Home prices have dropped to an eight-year low as reduced demand from mainland Chinese buyers and higher borrowing costs affect the market. The city also grapples with a significant backlog of unsold properties.

To address these challenges, alongside revising the CIES, Hong Kong is also relaxing mortgage rules, setting the maximum loan-to-value ratio at 70% for all homes.

These measures aim to increase accessibility to property purchases for a wider range of local and foreign buyers—albeit keeping foreigners’ access mostly restricted to luxury real estate given the high price tag.

Chen says that “from the government’s perspective,” this initiative is likely aimed at attracting high-net-worth individuals, stimulating the property market, and boosting capital inflows, all of which can support economic growth. She explains that securing assets in Hong Kong’s competitive real estate market under the CIES is “likely an appealing investment for many wealthy foreigners.”