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Hong Kong cuts stamp duty on commercial property amid slump
[HONG KONG] The Hong Kong government is scrapping an extra stamp duty levied on commercial property purchases in an effort to bring the lacklustre market back to life.
The government will abolish the additional duty for non-residential properties effective Thursday, Chief Executive Carrie Lam said during a speech. The levy of as much as 8.5 per cent of a property's value was introduced in 2013 to cool the overheated market. Commercial deals will still be subject to a standard duty of as much as 4.25 per cent.
It's not the first time the government has rolled out measures to stimulate transactions amid a recession and the pandemic. In August, Hong Kong's central bank raised the loan-to-value ratio for commercial properties to 50 per cent from 40 per cent to allow buyers to borrow more money to purchase office, retail and industrial space.
The city used to be one of the region's most active markets. Deals often broke world records before the double whammy of anti-government protests and Covid-19 ground activity to a halt.
Hong Kong has seen its commercial property transactions slump by 62 per cent since the beginning of the year from the same period in 2019, according to a November report by Real Capital Analytics. By comparison, the Asia-Pacific region posted a 31 per cent drop in deals.
Hong Kong's economy recently showed signs of recovery from recession. Its gross domestic product (GDP) declined 3.4 per cent in the third quarter from a year earlier, better than the median estimate of a 5.6 per cent contraction in a Bloomberg survey of economists. The city's GDP rose 3 per cent in the third quarter from the prior period.