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Hong Kong shop owners seek higher prices after scrapping of double stamp duty

  • Buyers are also more willing to meet sellers at higher price points as cancelled duty lessens financial burden
  • Sales of non-residential units rose 30.6 per cent month on month in December

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Shop owners are using the double stamp duty repeal to sell shops in less popular areas and to buy those in more profitable ones. Photo: Winson Wong
Jack Lau

Hong Kong shop owners are more likely to stand firm on asking prices, as they expect investors to flood the market after the city scrapped the double stamp duty for non-residential property, investors and property agents said.

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Buyers are also willing to settle at higher price points since their total expense will still be lower than before the duty reverted to its original rates on November 26 last year, said Dennis Cheng Tak-ming, a senior sales director at Ricacorp (CIR) Properties.

The Double Ad Valorem Stamp Duty (DSD), introduced in February 2013 to curb speculation, was scrapped for non-residential property after prices dropped and transactions slowed during the coronavirus pandemic and Hong Kong’s worst economic recession on record. Its maximum rate has dropped back from 8.5 per cent to 4.25 per cent.
December last year saw the sale of 1,529 non-residential units, a 30.6 per cent month-on-month rise from the 1,171 units that changed hands in November, according to Land Registry data. While the December data reflects market sentiment in November, Cheng said rumours about the double duty being axed that circulated weeks before the announcement had led to more transactions.

“Buyers will think – in the past, I had to pay 4.25 per cent more, or about HK$1 million [US$130,000], for a transaction of HK$40 million. But now, I’m willing to pay an extra HK$500,000 or HK$700,000 for the property,” Cheng said. “They will do this calculation now.”

02:02

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Buyers will also be enthusiastic because a typical transaction takes four to six months to complete, and properties sold now will change hands in the second quarter of this year, just in time for a full economic recovery in early 2022, Cheng said. Owners are also using this opportunity to sell shops in less popular areas and to buy those in more profitable ones, and they were not afraid of selling cheap, he added.

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