- Hong Kong residents are fleeing to the United Kingdom after China’s crackdown on the city.
- The exodus could cause Hong Kong’s notoriously high rents to fall 10% in 2021, per a new report.
- The city could also have the highest number of vacant homes that it’s seen in 18 years.
- See more stories on Insider’s business page.
For years, Hong Kong has been notorious for its astronomical real-estate prices. In 2020, it was named the world’s priciest housing market for the 10th year in a row.
But 2021 could be a year of major change for the city’s real-estate market. Hong Kong residents have been flocking to the United Kingdom since China passed a controversial new national security law last summer. In January, a new UK visa scheme made it even easier for Hong Kongers to move there. The British government said it expects more than 300,000 Hong Kongers to move to the UK in the next five years under the new scheme.
In their wake, Hong Kong’s infamously high rents could drop 10% and vacancy rates could hit an 18-year high, bringing a major shake-up to Hong Kong’s real-estate market, according to the South China Morning Post, who cited a new report from Bloomberg Intelligence.
An exodus from one of the world’s priciest cities
Hong Kong’s high cost of living and housing inequality are well documented. While the wealthy drop hundreds of millions on mansions and build “Versailles-like” villas, many residents can only afford to live in tiny “coffin homes.”
Even the COVID-19 pandemic and months of social unrest didn’t make have too much of an impact on Hong Kong’s prices in 2020. Rents stayed high last year and home prices dropped only 4% between May 2019 and October 2020, according to Reuters.
But 2021 could be a different story. After China passed a national security law last year that threatened life imprisonment for pro-democracy protesters, the UK saw record numbers of Hong Kongers applying for British National (Overseas) passports, known as BN(O)s, which allow them to live in the UK but don’t automatically grant them the right to work.
The British government said it issued about 200,000 such passports to Hong Kongers in the first 10 months of the year at a rate of about five passports every minute.
In January, the UK made it it even easier for Hong Kongers to live and work there, launching a new visa scheme for BN(O) holders to live and work in Britain and apply for citizenship after six years, according to a government statement. They can apply for the visas online from their homes in Hong Kong.
In total, roughly three million Hong Kong residents are eligible to apply for BN(Os) and move to the UK, according to a British government study.
China denounced the UK government’s recent move and said it would no longer recognize BN(O)s as valid travel documents.
An emigration boom
The influx of Hong Kongers to the UK over the past year has resulted in a surge in demand for luxury real estate in London, local agents told Insider’s Bill Bostock last summer.
In 2020, London homes that sold for 10 million pounds (about $14 million) or higher were “dominated” by buyers from Hong Kong and China, luxury real-estate agency Beauchamp Estates said in a January report provided to Insider.
Hong Kong, meanwhile, could have 66,683 homes sitting empty in 2021, up from 52,370 last year, according to the Bloomberg report.
“This is the biggest emigration boom in Hong Kong’s history,” Andrew Lo, a Hong Hong emigration consultant, told Nikkei Asia last month. “People from different levels of the society, aged from 18 to 80, are all talking about emigration.”