Hong Kong Accelerates Tech Hub Development to Boost AI and Innovation
Hong Kong's leader, John Lee, is set to unveil plans for a cross-border tech hub with China, aiming to transform the region into an innovation center and drive economic growth.
Hong KongTech HubAiReal EstateEconomyReal EstateSep 16, 2025
The initiative is designed to deepen integration with mainland China and diversify the city’s economy, which has traditionally relied on finance and real estate. According to state-owned media Wen Wei Po, Lee’s fourth policy address will outline measures to expedite the plan, including easing financing restrictions. The government plans to attract companies specializing in artificial intelligence (AI), renewable energy, and medical technology to anchor the new district.
Despite tentative signs of economic recovery, Hong Kong faces significant challenges. The economy grew at its fastest pace in more than a year last quarter, and fund-raising activity has increased. However, home prices have fallen for four consecutive years, bad debt is mounting, and unemployment is at a three-year high. The property industry has proposed measures to boost the real estate sector, but initiatives such as easing capital flows for mainland buyers or cutting property taxes are not on the agenda, according to the newspaper Sing Tao.
Reducing transaction levies would significantly erode fiscal revenue, making such steps untenable given the strained public finances, said Kathy Lee, head of research at Colliers International, at a media briefing last week. Monitoring cross-border capital in real estate is also more complex than in stock trading, raising concerns over potential capital flight or money laundering, she added.
Instead, the administration may revive the long-dormant Tenants Purchase Scheme, which allows public housing residents to buy their flats at discounted prices, RTHK reported. First launched in 1998, the program could help more locals climb the property ladder. Absent bold new measures, Hong Kong’s housing market is likely to remain under pressure. Home values hover near their lowest since 2016, even as interest rates dropped to a three-year low in June. Oversupply and weak sentiment continue to weigh on demand.
Such dynamics could hurt listed developers, as greater housing supply and price softness erode margins, said Evan Ng, a portfolio manager at Chartwell Capital. Still, property stocks may extend recent gains in the near term if Lee unveils stimulus to boost primary sales. A potential dip in mortgage rates following an expected US Federal Reserve cut could further aid developers such as Sun Hung Kai Properties Ltd. and Henderson Land Development Co. to sell homes, according to Bloomberg Intelligence’s Patrick Wong.
Hong Kong’s $7.2 trillion stock market, already surging on a liquidity-fueled rally, stands to benefit as the city’s leader touts more listings and capital inflows. The economy grew 3.1% in April-June compared to the same period last year, the fastest pace since the end of 2023. However, the expansion is expected to slow in the rest of the year as the effect of export frontloading fades.
The city’s largest trading partner, mainland China, reported a broad slowdown in August, adding to signs of a sharp deceleration in the third quarter that likely affects its smaller neighbor. Despite these challenges, Hong Kong remains committed to leveraging its unique position to become a leading tech and innovation hub in the region.
Frequently Asked Questions
What is the Northern Metropolis initiative?
The Northern Metropolis initiative is a plan to transform a sparsely populated region in Hong Kong into an innovation and advanced industries hub, deepening integration with mainland China.
What are the key industries the government aims to attract to the new tech hub?
The government aims to attract companies specializing in artificial intelligence (AI), renewable energy, and medical technology to the new tech hub.
What challenges is Hong Kong's economy currently facing?
Hong Kong's economy is facing challenges such as falling home prices, increasing bad debt, high unemployment, and a slowdown in economic growth.
What measures has the property industry proposed to boost the real estate sector?
The property industry has proposed measures such as easing capital flows for mainland buyers and cutting property taxes, but these are not on the agenda.
How might the revival of the Tenants Purchase Scheme help the housing market?
The revival of the Tenants Purchase Scheme could help more locals climb the property ladder by allowing public housing residents to buy their flats at discounted prices.
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