Hong Kong floats looser capital rules to woo mainland homebuyers

[HONG KONG] Hong Kong is seeking ways to ease capital transfer rules for mainland professionals buying property, in a bid to revive its flagging real estate market.

The city is in talks with China’s central government to study whether a “suitable framework” could allow more flexible fund transfers without triggering capital flight, Financial Secretary Paul Chan said in a press briefing on Wednesday (Jul 30). Chan’s comments were made during discussions on Hong Kong’s business environment.

Relaxed capital transfer rules could improve Hong Kong’s struggling property market. Mainland Chinese buyers have emerged as a major force, purchasing HK$11 billion (S$1.8 billion) worth of residential properties in June alone, according to Midland Realty. In some districts, they accounted for more than half of all new home transactions.

Beijing’s strict capital controls remain a major hurdle. Mainland residents face significant challenges in moving large sums of money offshore, limiting their ability to invest in Hong Kong real estate.

The financial hub’s housing market remains stuck in a prolonged slump, with home values showing only limited signs of recovery after seven years of decline. Oversupply and a sluggish economy continue to weigh on sentiment, keeping prices near their lowest levels since 2016, according to government data. BLOOMBERG