Cushman & Wakefield 2024/25 Budget Response

Response to the Budget 2024/25 by KK Chiu, International Director, Chief Executive, Greater China of Cushman & Wakefield:

We welcome the government’s proactive efforts in seeking land for housing development to ensure an adequate supply for future public and private housing. However, historical data shows that there have been frequent delays in the completion of private housing projects. We hope that the government can collaborate on various aspects of infrastructure development, provide incentives to developers, and encourage them to proactively develop land in the New Territories to expand the supply of private housing. Regarding public housing, we hope that the government can conduct a more in-depth study to adjust current housing policies, such as significantly tightening the allocation of public housing units to more wealthy individuals, so that deserving grassroots families who have been on the waiting list for many years can move in quickly, and resources can be utilized more fairly.

Based on data from the Census and Statistics Department, the number of individuals aged 65 and above in Hong Kong is projected to rise from 1.45 million in 2021 to 2.74 million by 2046. This demographic shift indicates a significant aging trend, with one in three citizens expected to be seniors by the 2046 date. The implications are profound in terms of the additional pressure on social services and infrastructure. In light of this, we recommend that the government takes proactive steps to address the challenges posed by the aging population. One key area of focus should be on enhancing elderly housing policies. This can be achieved through initiatives such as allocating funds to support aging in place programs and drawing insights from successful models such as the Ming Wah Dai Ha, managed by the Hong Kong Housing Society. By providing suitable accommodation options for the elderly, the government can help improve their quality of life and well-being. Furthermore, to stimulate private sector involvement in addressing the housing needs of seniors, the government could consider implementing measures such as land premium waivers. This can serve as an incentive for private developers to participate in the development of senior-friendly housing projects, thereby increasing the overall supply of suitable housing options for the elderly population in Hong Kong.

We are pleased to see the government now taking a more proactive and comprehensive approach to attract businesses to Hong Kong. With more than 10 key enterprises signing memoranda of understanding with OASES next month, we hope that the government will swiftly implement plans with these enterprises and enable new job opportunities, thereby helping to spur economic growth. However, given that the overall development blueprint for the Northern Metropolis area has yet to be approved by the Town Planning Board or endorsed by the Legislative Council, the implementation timeline remains distant. We also hope the government will introduce further specific economic stimulus measures in the short- to medium-term.

We welcome the government’s initiative to promote digital transformation in Hong Kong’s retail and food and beverage industries via Digital Transformation Support Pilot Programme. We believe that further upgrades in payment and storefront systems will assist merchants in serving a new wave of mainland tourists through the Individual Visit Scheme (IVS), in turn enhancing the consumer experience with more direct and convenient services, and creating new business opportunities.

We are pleased to see the government now taking a more proactive and comprehensive approach to attract businesses to Hong Kong. With more than 10 key enterprises signing memoranda of understanding with OASES next month, we hope that the government will swiftly implement plans with these enterprises and enable new job opportunities, thereby helping to spur economic growth. However, given that the overall development blueprint for the Northern Metropolis area has yet to be approved by the Town Planning Board or endorsed by the Legislative Council, the implementation timeline remains distant. We also hope the government will introduce further specific economic stimulus measures in the short-to medium-term.

We appreciate the government’s response to market demands by canceling all the demand-side management measures for residential properties. This action will facilitate an orderly adjustment of the real estate market, guiding it towards a healthier direction. Currently, three key factors are challenging the Hong Kong housing market: high interest rates, stringent stamp duty measures, and economic downturns coupled with stock market instability. With the government’s complete withdrawal of SSD, BSD, and NRSD, we anticipate a boost in confidence among potential homebuyers, leading to increased transaction volumes and revitalization of the property market chain.

In terms of property price trends, if the U.S. Fed initiates interest rate reductions this year, we can expect to see property prices stabilize and potentially see rebound from current levels in the 2H 2024 period.

In the 2024/25 Budget we have seen that the government has provided specific and actionable details regarding the development of the Northern Metropolis, particularly in terms of transportation and industry. We wholeheartedly agree with the government’s adoption of the planning principle of “infrastructure-led,” prioritizing the development of transportation networks and fostering diverse industrial sectors. In conjunction with the development of the Greater Bay Area, this approach will effectively attract talent and businesses.

We also welcome the government’s efforts in defining the development models and positioning for Hong Kong industries, including fisheries and agriculture, biomedicine, and the digital economy. These clear and specific directions contribute to determining Hong Kong’s distinctive roles and responsibilities within the Greater Bay Area industrial chain, and align with the three-year action plan released by the National Development and Reform Commission for the Greater Bay Area. This aims to create a world-class business environment and lay a solid foundation for the development of the Northern Metropolis area.

We are glad to see the government’s relaxation of mortgage policies for non-residential properties, together with the increase in tax exemptions. With banks’ cooperation, investors can now more flexibly choose properties without being confined to specific timeframes. Additionally, new property owners can calculate tax exemptions based on construction costs and the remaining tax liabilities of previous owners, further reducing transaction costs. We anticipate that these measures will create a more flexible and favorable environment for Hong Kong’s property investment market, sending positive signals, boosting confidence, and stimulating transaction volumes.

(Click here for high-res pictures)