Chinese rush, fearing higher residency hurdle

HONG KONG: A call to raise the qualifying investment level for foreigners seeking residency rights in Hong Kong has triggered a jump in the number of China buyers under the scheme, according to estate agents.

Under the Capital Investment Entrant Scheme, foreign investors can obtain residency in Hong Kong by making a capital investment in certain permissible assets, including property.

The minimum investment is HK$6.5 million (RM2.59 million), but Dr Priscilla Leung Mei-fun last month proposed raising the threshold to HK$10 million.

Since the existing requirement was set in 2003 and a high proportion of the investments had been made in property, it was time to review the scheme in order to reflect changes in the economy, she said.

The Capital Investment Entrant Scheme was introduced as part of an economic revival package after the Sars outbreak in 2003.

Her comments came after executive councillor Professor Anthony Cheung Bing-leung said in a radio interview that the government should consider preventing outside investors buying low- to medium-priced flats if cooling measures introduced last month failed to curb speculation in the property market.

Concerned that the investment window for immigration could be closing, or that the qualifying investment level might be raised, China buyers were now hurrying to buy under the scheme to secure residency status, agents said.

The government has not commented on whether changes are planned to the scheme.

The immigration consultancy division of estate agency Midland Realty, which assists buyers making applications under the Capital Investment Entrant Scheme, said it had advised 50% more clients on the scheme last month. "It was a record month for our company," Thomas Kut, chief executive of Midland Immigration Consultancy, said.

Wary of a possible change in policy, clients were now looking for properties immediately after submitting their applications under the scheme, Kut said. Previously most applicants would wait until they secured government approvals before making their purchases.

The Immigration Department said it had received 12,531 applications under the scheme up to June 30 this year, of which 9,829 were from Chinese. The scheme had attracted HK$52.87 billion in investments, of which HK$16.76 billion or 30% was in real estate.

But Kut said the proportion of investments in property had since risen to closer to 40%.

The growing volume of hot money flowing into the market has raised concerns the investment scheme could be helping to fuel surging house prices.

On August 13, the government introduced several measures to slow the rise in prices and the Hong Kong Monetary Authority cut the maximum uninsured portion of a mortgage loan on flats worth HK$12 million or more to 60% of the property's value from 70%. The government also banned confirmor transactions for uncompleted flats, and increased land supply.

Thomas Lee Pui-cheung, sales director at Centaline Property Agency's Tsim Sha Tsui and Kowloon Station branch said more flats worth HK$7 million or more were being bought by Chinese under the migrant scheme.

Many China buyers were opting to buy at The Victoria Towers in Tsim Sha Tsui, where flats were less expensive, he said. Monthly transactions at the estate were not affected by the government cooling measures mainly owing to this support from China buyers.

"Some buyers signed a sale and purchase agreement on the same day that they arrived in Hong Kong," he said. — South China Morning Post