Buying Residential Property in Hong Kong: What You Need to Know, Part 1
Understand the essential steps you need to know for buying a property in Hong Kong, from how to hire a real estate lawyer & property tax to other must-know information.
If you have ever wondered how to buy property in Hong Kong, this is the ultimate Buyer’s Guide covering everything you need to know about Hong Kong’s residential property market. We’ll look at where to start the purchase process through to the most crucial final steps of acquiring property in Hong Kong as well as answering some common questions like whether foreigners can buy property in Hong Kong. For this article, we’ll be basing it on purchasing a HK$30 million Colonial, second-hand flat.
Hong Kong, unlike many other residential property markets around the world, has one of the most transparent and straightforward routes to buying real estate. With few exceptions (which primarily involves stamp duty rates) – there are no separate rules on purchasing property in Hong Kong, that apply to either expatriates, permanent residents or native Hongkongers. Additionally, despite rising residential prices, there is still currently strong price diversity for those willing to look around.
Step 1: Decide the reason for your purchase
The same way you would with purchases of a bottle of wine, a mobile phone or a pair of shoes, buyers should begin by asking themselves what the fundamental function of buying a property in Hong Kong will be. In this case: What is the main use of this property going to be? Decide if a flat will be an investment for long-term capital gain, a revenue-generating rental property or for use as your primary home. The function of a property can influence factors such as location, price, flat size and renovation costs you’re willing to incur.
Step 2: Determine your budget and financing
There's more to calculating your budget than simply the cost of the property. A budget of HK$30 million could change significantly once you factor in incremental fees that are often forgotten. Legal fees and property agents’ fees are rarely overlooked, but buyers should bear in mind applicable Stamp Duties as well as any planned renovations, moving costs, short–term leases required during renovations etc. Estimate what those might be – plus 10% buffer – and either add or deduct them from the property’s HK$30 million price tag to come to a more accurate figure to work with.
Until around 2005, buying a “luxury” property in Hong Kong was defined simply as costing over HK$10 million. As prices of more mainstream, mass-market flats began exceeding that level, the general metric became size: usually over 1,200 gross square feet. When fixing a budget, other factors that will impact what you can buy include:
- Financing - will you need a mortgage, and if so how much can you afford to repay per month?
- Location - Hong Kong Island is the most expensive and sought-after with it’s limited supply. Other areas in the New Territories can be more affordable
- Age – The age of a building can impact financing with many banks either not lending or only giving short mortgage terms on property that is over 60 years old.
- Views/Outside space – Views do have an impact. Water-facing flats demand a premium and terraces, rooftops and outdoor space also command a premium
- Feng Shui - Elements, such as views of a graveyard or deaths/murders or other crimes on a property can adversely impact price – not only that property but to all the properties on that floor. Numbers can also have a positive or negative impact on value – the No 8 is considered lucky, whereas the No 4 or 44 or any numbers that sound like death in Chinese can negatively impact value. There’s also some local cultural issues that can impact the price or appeal of a property – e.g. many Chinese don’t like walking downstairs to bedrooms, or a road that looks to intersect with the property is also considered bad feng shui.
It's important to check these issues and understand them in relation to your property buying in Hong Kong.
- Access to amenities - Proximity to beaches, hiking trails, country parks, shops, dining, schools and other amenities influence decisions on location and impact pricing and have become even more important since Covid.
Step 3: Start looking
Technology has made the search process more convenient. Across all digital platforms from websites to social media, you can access a wealth of information and content on the Hong Kong residential property market.
Habitat Property has the most comprehensive and popular digital presence in Hong Kong having just won the 2022 Asia Pacific Property Awards for our website, with a detailed search function, plus the most popular Instagram page with over 30,000 followers. Explore the various Hong Kong neighbourhoods on our site, considering the pros and cons of each, even take a walk around your short-listed favourites to get a feel for the ambience, location etc.
Step 4: Find a property agent
Property agents are an invaluable resource that will share insight to help you understand the Hong Kong residential market trends that may be unfamiliar to you, no matter how informed you are as a consumer. Hong Kong agents must be licensed by the Estate Agents Authority (EAA), and it is common for an agent to represent both the vendor and the purchaser. Standard fees are fixed at 1%, payable by both buyer and seller.
At Habitat, our agents are all highly experienced and up to date on market conditions, helping to advise how to maximize the potential of the property.
Step 5: Find a real estate lawyer
In the way a property agent can help you navigate the Hong Kong property market, hiring a good real estate lawyer is a must to guide you through the nuances of any contract, conveyancing, compliance, property tax, land registry, titling and other statutory issues that may arise during the purchase process. Refer to the Law Society of Hong Kong for other information. Alternatively your agent may be able to recommend a few based on recommendations from their other clients.
CONTINUE TO PART 2 >>
YOU MAY ALSO LIKE