Commercial property double stamp duty axed

Top News | Kevin Xu 26 Nov 2020

The double stamp duty on commercial property transactions is abolished from today as the market reels from the pandemic and the Sino-US tensions.

Stanley Poon Chi-ming, managing director of Centaline Commercial, expects transaction volumes of commercial properties to jump 20 to 30 percent in the short term.

The removal of the double stamp duty will largely benefit commercial properties worth under HK$100 million, particularly retail properties that have recorded a sharp fall in capital value, said Joseph Tsang, chairman of JLL in Hong Kong.

Capital values will be less likely to see a strong rebound until leasing demand picks up and rents begin to rise, said Marcos Chan Kam-ping, head of research for the Greater Bay Area and Hong Kong at CBRE.

Under the current economy, the measure may only help to stabilize the property pricing, said Henry Lam, executive director and head of capital markets of Knight Frank. "We do not expect a price surge in the short term."

The measure came three months after the Hong Kong Monetary Authority relaxed the loan-to-value ratio caps for mortgage loans on nonresidential properties by 10 percentage points from 40 percent to 50 percent.

The number of office, retail and industrial property transactions involving HK$20 million or above surged 22 percent quarter-on-quarter in the third period amid the government's relaxation of the minimum loan-to-value ratio in August, said JLL.

However, the government had no plan to remove stamp duty on residential property. Shares of Midland plunged 12.64 percent to HK$0.76 yesterday.

Some celebrities bought properties in the run-up to the policy address, with Whealthfields founder David Cho Tai-Wai splashing out about HK$16 million for six car parking spaces at The Entrance in Ma On Shan.

Double stamp duty was introduced in 2013 against the backdrop of an overheating property market with hectic trading activities and soaring prices, the government said.

Vacant Grade A office space hit a 21-year high of about 7.8 million square feet in September. CBRE expects Grade A office rents to fall 15 to 20 percent this year, noting they have fallen 13.8 percent in the first three quarters of the year.

Meanwhile, high-street shop vacancies in four core districts - Central, Causeway Bay, Tsim Sha Tsui and Mong Kok - rose 4.8 percentage points to 18.3 percent in the third quarter from the second quarter.

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