After eight years, the move responds to a duller city with slowing economy
HONG KONG — Hong Kong is bringing back an investment migration program it axed eight years ago in a bid to restore its status as a global financial hub within China’s sluggish economy and steady outflow of talent.
Wealthy individuals who invest more than 30 million Hong Kong dollars ($3.85 million) in non-residential real estate, equities and other financial assets will be eligible for Hong Kong permanent residency after seven years, the government announced on Tuesday.
Under the revised Capital Investment Entrant Scheme, which will begin accepting applications from mid-2024, foreign nationals and mainland Chinese individuals who hold foreign residency status will be granted the right of abode if they meet the requirements.
Those include investing HK$3 million into an investment portfolio managed by the Hong Kong Investment Corporation, a sovereign investment operation that aims to pour money into fintech, artificial intelligence, biotechnology and high-end manufacturing.
The right of abode for eligible family members has been updated to include same-sex partners.
“The objective of the scheme … is to benefit the real economy of Hong Kong,” Christopher Hui, the city’s deputy secretary for financial services and treasury, said at a press briefing. “We are very confident we are competitive.”
Hong Kong has been trying to attract the ultra-rich by offering tax-friendly policies, but so far the response has been muted. The previous capital investment entrant scheme was axed in 2015 after it helped transform Hong Kong into one of the world’s most expensive real estate markets, pricing out many local residents.
The city has since lost much of its luster among foreign investors due to geopolitical tensions and the slowing Chinese economy. Many multinational corporations have moved their headquarters elsewhere, taking with them expatriate employees.
Meanwhile, high net worth Chinese individuals are looking to park their money in places like Singapore due to concerns over Beijing’s tightened hold on Hong Kong.
The old program attracted mostly Chinese investors, said Denny Ko, founder of Primasia Metropolis Immigration Consulting. He added that the revamped scheme could attract a more diverse group of investors from around the region.
“But it is not innovative or aggressive,” he told Nikkei Asia. “If the overall policy is to attract capital and talent to the city, the scheme should also allow the purchase of one residential property within the portfolio.”
Harsh pandemic restrictions and a national security law sparked an exodus of local and expatriates. The population dropped from 7.5 million before the pandemic in 2019 to 7.42 million by the end of 2022.
The city is also struggling with a talent shortage, a problem acknowledged by Chief Executive John Lee, who has vowed to go on a “talent trawl” by introducing various work visa schemes including a Top Talent Pass Scheme.
Three out of four companies are finding it difficult to hire skilled workers for the first quarter of next year, according to an employment outlook survey by ManPowerGroup Greater China.
The new investment scheme could boost capital markets in the property sector, which has seen a downward trend since 2020. The total investment volume of commercial properties sold for HK$50 million or more has dropped by 4.7% in the second half of 2023 compared to the first half.
The financial center’s economic condition has been rather gloomy.
Earlier in December, Moody’s Investors Service downgraded the outlook of Hong Kong’s sovereign credit rating to negative due to its “assessment of tight political, institutional, economic and financial linkages between Hong Kong and [mainland China]”.
The city’s oldest business group, the Hong Kong General Chamber of Commerce, also foresees a more negative business environment in the coming year, citing a frosty geopolitical landscape, high interest rates and weak global demand.
In November, the Hong Kong government slashed the GDP growth forecast for this year from 5% to 3.2 %.