In Focus
ECONOMY | Staff Reporter, Hong Kong

What can drive Hong Kong's economic growth?

JLL has identified eight drivers that will bring Hong Kong to “New Heights”.

Hong Kong’s economy has shown resilience over the years as seen not only during the crisis brought by the pandemic, but also during the social tensions it faced in the past two years.

“With China already firmly established on a renewed growth trajectory, Hong Kong is set to benefit. Already this year, total trade in the first two months has grown approximately 30% year-on-year,” Gavin Morgan, Managing Director at JLL in Hong Kong and COO in Greater China, said.

On top of opportunities Hong Kong may capture with China’s growth, Property consultancy firm JLL also identified eight drivers that will further boost the city’s economy.

1. Economic/ business agenda

The government has resources, such as its fiscal reserves worth $900b, that it can use to address economic strains and invest in infrastructure and other developments in the Greater Bay Area.

“Smart businesses have also been rethinking how operations and assets in Hong Kong fit into their Greater Bay Area, China and global strategies,” according to JLL’s report on New Heights: Is Hong Kong Poised For Future Growth.

It noted business decisions will likely have implications for real estate investment needs against the backdrop of rising opportunities.

2. People

The people of Hong Kong are deemed “uniquely action-oriented,” which could boost momentum of project developments likely to produce successful outcomes.

3. Friendly Business Environment

The absence of foreign ownership restrictions and limits in the movement of capital, talent, goods or information eased entry of businesses in the city. Census and Statistics Department data has shown that more companies from mainland China, France, Germany, the UK and Singapore are setting up their regional headquarters in Hong Kong.

Aside from this, an InvestHK survey reported a rapid growth of tech start-ups opening in the city.

4. China and global connector

Hong Kong’s lead in the global financial hub scene makes it an ideal place for Chinese businesses planning to go public and raise international capital. It also serves as a venue for multinational companies looking to connect with Chinese, and global trade and capital market opportunities.

5. Infrastructure and transportation

The city has a vast network of mass transportation, which also works for the integration of Hong Kong businesses into the Greater Bay Area. This is evident in the seamless flow facilitated by the Hong Kong-Macao-Zhuhai Bridge and the Tuen Mun-Chek Lap Kok Link.

The city may also bank on the Hong Kong International Airport as it is poised to be a regional hub and global connector.

6. Low and simple tax regime and independent judiciary

Businesses have one less thing to worry about when it comes to taxes in Hong Kong which is simplified into three types of direct taxes: profit, salary and property taxes.
“The simple tax system encourages corporates and individuals to focus on their businesses and work, as well as simply strive for the best economic outcomes,” JLL said.

7. Improving quality of life

JLL sees increasing demand for housing as Hong Kong residents aspire to upgrade their living conditions, which is presently contained at around 15 sq. m. of living space on average.

8. Land supply

Major initiatives are being taken to build new central business districts and technology parks in Hong Kong to cater to real estate needs in the future. The Task Force on Land Supply have also identified supplies for short-to-medium, medium-to-long term and conceptual ideas.

Moreover, the development of a CBD2 at the former Kai Tak Airport is seen to reshape the concept of business dwelling in Hong Kong. Office space in CBD2 will grow by more than 50% to close to 30 million sq ft in the coming decade, according to JLL.

Nelson Wong, Head of Research at JLL in Greater China, recommended the government to back these drivers, particularly concerns on land supply, with policy initiatives.

He added the private sector, for its part, should innovate and sustain mixed-use developments.

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