Close

Buying a property in Hong Kong

Recommend

Hong Kong is home to a large number of expats, many of whom call the city their second home. Thus, it comes as no surprise that some are eager to have a place of their own. What's the process for buying property as an expat in Hong Kong and is the city as expensive as they say? Find out more in this article.

Hong Kong's real estate market has long been famous for its extravagant pricing. The city has ranked the world’s priciest home market seven times in a row: Hong Kong’s apartment cost is estimated to be 18.1 times gross annual median income.

According to the latest data released by Rating and Valuation, Hong Kong’s average price for a home is HK$4.34 million for a 430 square feet flat in Kowloon. The website also estimates that, for this price, you could purchase a flat in New York (double the size), a townhouse in central Dublin or even a castle in Italy.

With that said, the city is still considered favourable ground for real estate investment — especially among expats. So, if you have managed to find a place to your liking and within your budget — well, first, congratulations! Second, here’s how to proceed with the legalities of property purchase in Hong Kong.

Conditions

All the land present in Hong Kong is the government's property. Therefore, when buying a property, you will rather be buying a building rather than the land on which it is located. Hence, you will in fact be eligible for a long-term lease rather than a property title. The long-term lease period can range between 75 and 999 years. Prices also tend to vary according to the duration. Therefore, you are required to pay a land rent to the government on buying a building.

Procedures

The whole land purchase procedure has to be notified to the Land Registry beforehand. You will then proceed as follows:

Signing a provisional agreement

The buyer and the seller have to sign a provisional agreement established by the broker or real estate agency. In the case of a major investment, your real estate lawyer has to evaluate the value of the property before drafting a formal agreement without passing through the provisional agreement step. You also have to make a deposit ranging between 3% and 5% of the property's total value.

Meeting with the lawyers

Both the buyer and the seller have to hire a specialised lawyer to assist them with related procedures. They will be responsible for negotiating the formal agreement in accordance with the provisional agreement. They also have to take into account any particular situation regarding the real estate transaction.

Second instalment

You will have to make a second instalment on a subsequent date according to the conditions mentioned in the provisional agreement. This installment, however, should be paid either before or on signing the formal agreement.

Finalising the formal agreement

The formal agreement has to be signed at your lawyer's cabinet. The second instalment, therefore, which will amount to 5% to 7% of the property's total value, depending on the first installment paid, will normally account for a total of 10% of the property's value. You are also required to pay a tax stamp.

Thereafter, the formal agreement will be transferred to the seller's lawyer. The second instalment then has to be paid to the seller, unless it has to be kept by the lawyer. Once all documents have been signed, the seller's lawyer will send a copy of the formal agreement to your lawyer. The latter will then take care of paying the tax stamp and register the deal at the Land Registry. Finally, both parties' lawyers will have to transfer the property title.

Inventory

You are advised to conduct an inventory on the spot before finalising the deal. You are then required to inform your lawyer whether you are satisfied on the transaction date. You lawyer will then finalise remaining administrative formalities (bank, transferring documents to the seller's lawyer, etc) before the deadline mentioned in the formal agreement.

Access to the building

Once the full payment has been made, the seller's lawyer will give the property's keys to your lawyer. Note that other formalities have to be completed by both lawyers before you can occupy the property.

Find a property

It is recommended that you seek the help of a broker or real estate agency when looking for a property to buy. Note that property prices are likely to vary according to several factors, namely the place and neighbourhood, the environment (noisy, residential, etc.) as well as the property's antiquity. Most of the affordable properties are found in the New Territories, although prices are considerably high almost everywhere.

 Useful links:

Land Registry
Land Registry – Payment of property tax
Square Foot
Hong Kong Homes
Spacious

We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
Recommend
expat.com Your favourite team
Member since 01 June 2008
Small earth, Mauritius
Write a comment

See also

As Hong Kong is very densely populated, expats will find mostly apartments available. Accommodation is also quite expensive.
Hong Kong inhabitants' lifestyle is a bright mixture of modernism with Chinese traditions and customs which you can discover during your stay.
Besides shopping, walks and cultural events, there are several other ways to keep yourself busy in Hong Kong; namely, sports activities.

Expatriate health insurance in Hong Kong

Free advice and quotation service to choose an expat health insurance in Hong Kong

Moving to Hong Kong

Find tips from professionals about moving to Hong Kong

Travel insurance in Hong Kong

Enjoy stress-free travel to Hong Kong

Flights to Hong Kong

Find the best prices for your flight tickets to Hong Kong

2 million members!

Watch later