Foreign talents are flocking back to Hong Kong, driving up the rental market and increasing competition for international school places.

According to media reports, as the Hong Kong IPO market recovers and tax incentives are introduced for private equity and hedge funds, foreign employees are increasingly returning to Hong Kong. However, this return of talent has led to a more competitive rental market and increased demand for international school placements. For instance, rents for high-end residences in areas like Mid-Levels surged by 14% in June, outperforming the broader market. Many financial institutions are rebuilding their executive teams in Hong Kong, signaling confidence in the long-term development of the region. Bank of America has transferred Thorsten Pauli, the head of capital markets for the Asia-Pacific region, from Zurich to Hong Kong; Aileen Taylor, HSBC Groups Chief of Human Resources and Governance, plans to relocate from London to Hong Kong to strengthen its senior management team in the Asia-Pacific; HSBCs CEO has also been working in Hong Kong for an extended period this year, with the group maintaining around 20,000 employees in the region. Official data also indicates that the number of employment visas approved for foreigners last year was more than twice that of five years ago. In the financial services sector, the number of visas granted to foreigners grew by 17% last year, reaching the highest level since 2022. This influx of financial talent has directly driven up local rents and competition for international school placements. Foot traffic in Core Central district commercial buildings has notably rebounded. The Henderson, operated by Henderson Land, which was once seen as a barometer of the commercial property market, currently has an occupancy rate of 90%; while the occupancy rate for the second phase of Cheung Kong Group Centre has doubled to about 60% this year. In terms of residential rentals, data from the online platform Spacious.hk shows that rents in neighborhoods favored by expatriates have significantly increased over the past year, far exceeding the citywide average. In June, rents in high-end residential areas like Mid-Levels and The Peak rose approximately 14% and 13% year-on-year, respectively, outpacing the average increase of about 10% during the same period. The situation regarding international school placements is even more pronounced. According to Ampla Education, an education consulting firm, the waiting time for placements at major international schools in Hong Kong now commonly extends to a year. Data from the Hong Kong Education Bureau indicates that the student population in international schools has grown by about 10% over the past three years, exceeding 48,000, while the increase in available placements has been less than 5%. However, whether the talent return trend can be sustained will still depend on the performance of the IPO market and the responses of financial centers like Singapore and Dubai. Currently, Hong Kong is actively promoting its low tax rates and relatively fewer regulatory burdens to ultra-high-net-worth business owners and asset managers worldwide. Recently, Hong Kong officials proposed a bill aimed at effectively exempting some fund managers performance-related income from tax liabilities.