Cushman & Wakefield 2023/24 Policy Address Response
- Written by Daily Sun
In addition to the designated areas in the Northern Metropolis, we recommend that the government promptly establish a comprehensive development blueprint and comprehensive infrastructure for the new town development areas. We are pleased to see the government is promoting new projects for the two railway lines and one road, which will contribute to the development of new towns in the eastern part of the Northern Metropolis. These measures will facilitate private developers in accelerating the development of the area, expediting new town development, and further enhancing the surrounding facilities.
Housing Supply
Cushman & Wakefield acknowledges the government's proposal to enhance the quality and expedite the Modular Integrated Construction (MiC) as the innovative building technologies for public housing. However, the current demand for public housing still far outweighs the supply. We recommend that the government reevaluate the overall public housing policy. For instance, in the rental housing sector, the income and asset limits for eligibility to reside in public housing should be lowered to prevent the misuse of public housing and ensure that resources are allocated to those truly in need.
Furthermore, regarding subsidized sale housing, it is suggested that in the future, the sale of Home Ownership Scheme (HOS) flats should only be allowed in the secondary market at prices agreed upon by the owners, exclusively for buyers nominated by the Housing Authority. They should not be sold on the open market through land premium subsidies to maintain an adequate supply of HOS flats for eligible applicants.
International Hub for Post-secondary Education
The government's proposal in the Policy Address to shape Hong Kong into an International Hub for Post-secondary Education by increasing the quota for non-local students in the eight subsidized universities to 40% is recognized by Cushman & Wakefield as a measure that contributes to the development of new industries and the cultivation of future talent. However, the current number of student dormitories falls far short of meeting the accommodation needs of students. Some tertiary institutions even face a situation where an average of six students compete for one dormitory place. Moreover, some students are unable to afford the high rental costs and struggle to find suitable housing units.
Therefore, we recommend that the government review and plan for long-term local dormitory supply. This could be achieved by considering the incorporation of provisions in land leases to support the construction or renovation of private student dormitories. Additionally, reserving land in the northern New Territories for educational use and engaging with educational institutions to improve related facilities would facilitate the future study experience of non-local students in Hong Kong.
The government is determined to transform Hong Kong into an international I&T centre. In line with "Hong Kong Innovation and Technology Development Blueprint", the government is expediting the establishment of a supercomputing centre to foster AI development. From next year onwards, Cyberport will establish an AI supercomputing centre in phases, with a view to supporting the huge demand for computing power from R&D and relevant sectors and promoting industry development.
Hong Kong possesses a comprehensive and reliable network infrastructure, a robust demand, and a wide range of cloud service providers. It has always enjoyed a favourable business environment and a low tax rate structure, making it highly conducive for the development of the data centre industry.
However, the medium to long-term supply will be constrained by land scarcity, lengthy and complex approval procedures, and limitations in power supply. To promote Hong Kong as a world-class I&T centre hub, Cushman & Wakefield suggests the government to increase suitable land supply in popular areas such as Sha Tin, Tsuen Wan, Kwai Chung, and Faling, in streamlining the approval process for infrastructure and collaborating with power companies to enhance power allocation. These measures will attract more I&T centre operators to establish their presence in Hong Kong and drive its transformation into an international I&T centre.
Logistic Land Use
Response to Policy Address 2023/24 by Kevin Lam， Head of Retail Services， Hong Kong of Cushman & Wakefield:
We anticipate the series of newly proposed activities will synergize, and can build upon last year's proposal on urban sports and other local sports events, to attract both domestic and regional participants, resulting in supporting the growth of tourism, hospitality, retail, and food and beverage businesses, mitigating the dilution of local consumer spending power while travelling abroad.
In this year's Policy Address, Cushman & Wakefield recognizes the Government's commitment to expanding the talent pool through the introduction of a series of "attract and retain talent" policies. According to the policy address, as of the end of September, approximately 160,000 talent scheme applications have been received, with over 100,000 approved and around 60,000 talents have arrived in Hong Kong. As mentioned in our earlier published research report titled "Hong Kong Talent Housing: A New Niche Sector ", it is expected that the number of overseas talents and students settling in Hong Kong will continue to grow in the coming years. This indicates investment opportunities for rental apartment properties such as co-living, multi-families, and student housing. In fact, there have been recent plans by tertiary education institutions to acquire hotels for use as student dormitories. We expect an increase in investment opportunities in serviced apartments and hotel properties, as the demand for such rental accommodation rises with the influx of overseas talents and students. properties, as the demand for such accommodations increases with the arrival of more oversea talents and students.
Stamp Duty & Residential Market Forecast
Cushman & Wakefield welcomes the Government's proposal in the Policy Address to adjust various stamp duty policies in response to market demands. Specifically, the application period for the Special Stamp Duty (SSD) has been shortened from three years to two years; Buyer's Stamp Duty (BSD) and New Residential Stamp Duty (NRSD) have been reduced by half, from 15% to 7.5%. We believed these adjustment will help alleviate the costs for Hong Kong permanent residents when purchasing the second residential properties and for non-permanent residents to acquire properties, thereby improving market sentiment and restoring confidence among potential buyers and upgraders. Furthermore, these changes are expected to increase the supply and turnover of the secondary property market.
Moreover, Cushman & Wakefield is pleased to see that the government has accepted industry feedback and implemented the stamp duty suspension arrangement for incoming talents' acquisition of residential properties. This policy is expected to align more effectively with the government's efforts to attract and retain talents, removing barriers for prospective talents looking to develop their careers in Hong Kong. It will contribute to Hong Kong's ability to attract and retain talents, thus building a diverse talent pool.
The various stamp duty policies will indeed have a positive impact to the residential market. It is hoped that the government will continue to pragmatically review its policies by collecting and studying real-time changes and data from the market from multiple perspectives, and make proactive policy adjustments without waiting for the next Policy Address.
Looking ahead, it is anticipated that residential property transactions will rebound by 20% to 30% following the government's stamp duty reduction. However, the current housing market in Hong Kong is still affected by factors such as high interest rates, stock market fluctuations, and global economic uncertainties. Additionally, developers hold a significant amount of unsold inventory, resulting in a relatively high level of housing supply. As a result, it is unlikely that there will be an immediate and significant V-shaped rebound in property prices. Nevertheless, in the long run, the adjustments and relaxation of stamp duty measures will contribute to the stable development of the property market.
Cushman & Wakefield welcome the Government's proposal in the Policy Address to accelerate the development of the Northern Metropolis. Building upon the foundation of the four major zones, the government will further consolidate and position land in various regions by providing a more focused and practical direction for the overall development of the Northern Metropolis. It is crucial to emphasize that the focus should not solely be on residential supply, but rather on industrial development and transportation networks. The former statement can generate substantial employment opportunities and act as an engine for driving economic growth, while the latter serves as a catalyst for regional and industrial development, facilitating external connectivity and sustainable growth.
The Innovation and Technology Center holds crucial significance as the San Tin Technopole and Shenzhen Innovation and Technology Zone determine the industrial positioning of the entire Northern Metropolis. Therefore, we suggest the government to expedite the development of the Innovation and Technology Zone in order to enhance the execution capabilities of various departments, and promptly implement the action details outlined in the policy address. This will align with the rapid progress in Shenzhen and maintain Hong Kong's competitiveness with a synergistic effect.
Adjustment of Measures in the Hong Kong Property Market in Accordance with Market Positioning
Hong Kong's current economic situation and the positioning and industrial development, have undergone significant changes since the implementation of stamp duty measures. Today, Hong Kong has become an internationalized world-class city, driven by the Greater Bay Area and One Belt and Road initiatives. It has also become a vital strategic hub connecting Mainland China with the rest of the world. Therefore, Hong Kong must provide the most stable, efficient, safe, and free business environment to effectively support the operations of international enterprises and investors. It should also minimize restrictive policies, including the current stamp duty measures. It is hoped that the government will pragmatically continue to review the stamp duty adjustment policy to facilitate Hong Kong's future development.
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