21 October 2024

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Much anticipated, Hong Kong adds residential property to its investment pathway to residency

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Last week, Hong Kong announced it will start to include residential properties as eligible investments under its Capital Investment Entrant Scheme (CIES). Prior to this announcement, eligible real estate assets had been limited to commercial property. The residential property must be no less than HK$50 million (or approximately US$6.4 million) and HK$10 million of that will count towards CIES eligibility. The property must have been purchased on or after the launch date of CIES, which was 1 March 2024. As a Hong Kong based law firm with immigration capabilities and expertise, DCLO has fielded numerous inquiries regarding CIES since its launch.

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In December of last year, the Hong Kong government announced the planned launch of the new CIES (there had been previous iterations) to substantial fanfare. The headline was that for HK$30 million (or approximately US$3.8 million) of investment, an applicant could start the clock of seven years to reach permanent residency. This is in contrast to Singapore, for example, where applicants for permanent residency can be rejected, with no explanation given.

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As a new element from past iterations of CIES, eligible investments now include those made via the recently introduced investment vehicles in Hong Kong, namely the Limited Partnership Fund (LPF) and Open-ended Fund Company (OFC). These are similar to BVI partnerships and Cayman special purpose companies, respectively, yet can be done onshore here in Hong Kong. Importantly, there are no restrictions, as far as CIES is concerned, on the type (or even location) of the underlying investment made via an LPF or an OFC. We have experienced a significant interest from our clients in these vehicles, in particular LPFs, and accordingly DCLO has assisted with a number of LPF establishments.

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As it stands now, commercial real estate can count toward HK$10 million, LPFs and OFCs (combined) can count toward HK$10 million, and the newly added residential real estate can count toward HK$10 million, thereby fulfilling the entire requirement of HK$30 million. This means that one can apply through real estate and unrestricted investments alone, without having to utilize any of the other categories, which are more prescriptive in nature, such as having to be Hong Kong listed equities or debt.

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By saying the residential property must be no less that HK$50 million, Hong Kong is striking a balance by not putting pricing pressure on the lower end of the housing market (rather, supporting the luxury market), and also mandating an outsized amount (HK$50 million), to the befit of Hong Kong compared to the amount that is eligible to count toward CIES (HK$10 million).

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Adding residential real estate to CIES is a smart move by Hong Kong and an area to watch in the coming weeks.

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Besides, with an average starting price of HK$20,000 (US$2,500) per square foot, shouldn’t new arrivals be intitled to treat themselves to a nice place to live!

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For further information, please feel free to contact the author David Cameron david.cameron@dc-lo.com  ​