Hong Kong Business (October - December 2022)

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Display to 31 December 2022 HK$40 HONG KONG’S PROPERTY MARKET ENDS DOWNCYCLE PROPERTY ISSUE THE WHERE TO INVEST MILLIONS IN HONG KONG REAL ESTATE HONG KONG’S MOST NOTABLE REAL ESTATE AGENTS UNDER 40 WHY MAINLAND’S BORDER REOPENING WILL BE CRUCIAL FOR THE LUXURY MARKET IN 2023 FORMER MANULIFE HONG KONG CEO IS NOW ONE OF ASIA’S TOP INDUSTRY EXECUTIVES Hong Kong’s Best Selling Business Magazine Issue No. 68
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Experts’ 2023 outlook on Hong Kong’s property sector may entice investors to reconsider the city as a property investment destination. The property market is poised to end its downcycle in 2022 and enter 2023 with hopes of normalisation. Investors keen on putting their money into Hong Kong real estate must keep their eye on hotels in particular. Mainland’s border reopening will also be crucial for the luxury property market in 2023.

Hong Kong has slowly regained its attractiveness as a property investment destination, and amongst to thank are the region’s realtors who were determined to end the city’s downcycle. In recognition of their hard work, we feature 17 real estate agents under 40 who displayed leadership in their respective communities amidst challenging times. See the full list on page 40.

We sat down with Manulife Asia CEO Damien Green to talk about his journey as a former insurance outsider, to former CEO of Manulife Hong Kong, to becoming one of the region’s top industry executives. See the exclusive interview on page 36.

Read on and enjoy!

HONG KONG BUSINESS | Q4 2022 1
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FROM THE EDITOR
Tim Charlton
& EDITOR-IN-CHIEF Tim Charlton ASSOCIATE PUBLISHER Louis Shek PRINT PRODUCTION EDITOR COPY EDITOR PRODUCTION TEAM Jeline Acabo Tessa Distor Noreen Jazul Djan Magbanua Frances Gagua Charmaine Tadalan Consuelo Marquez
2 HONG KONG BUSINESS | Q4 2022 JANUARY 2019 CONTENTS Published Quarterly by Charlton Media Group Pte Ltd, Room 1006, 10th Floor, 299QRC, 287-299 Queen’s Road Central, Sheung Wan, Hong Kong For the latest business news from Hong Kong visit the website www.hongkongbusiness.hk FIRST ANALYSIS LUMINARIES REPORT INTERVIEW 34 COVER STORY PROPERTY MARKET ENDS DOWNCYCLE REAL ESTATE WHERE TO INVEST YOUR MILLIONS IN REAL ESTATE 42 06 Why it’s time to remove cooling measures 08 This is how much Hong Kong’s tech companies are paying their talent 09 Why the next 3 years are crucial for the office property sector 10 F&B’s performance the highest postpandemic 25 HK’s poorest to be hit hardest by extended waiting time for public flat 26 Fintech funding slows as COVID’s digital hype fades 44 Why Mainland’s border reopening will be crucial for the luxury market in 2023 40 Hong Kong’s most outstanding real estate agents under 40 16 Cathay Pacific concerned that HK has lost competitiveness 18 How key aviation players are pushing the industry for takeoff 28 Board diversity is more than giving seats to women 29 How virtual insurer Bowtie halves product prices 30 Why HK remains robust amidst energy crisis 36 Former Manulife Hong Kong CEO is now one of Asia’s top industry executives 38 What YAS MicroInsurance’s vision of an on-demand insurance product looks like 43 Addressing ESG investment gap with data BRIEFINGS 12 How financial institutions can overcome the booming demand for ESG roles 14 Why tax deduction on domestic rents is not really a win for tenants 20 STARTUP ECOSYSTEM IMPROVING HONG KONG’S STARTUP ECOSYSTEM
HONG KONG BUSINESS | Q4 2022

Daily news from Hong Kong

The adoption of conversational commerce rose in popularity as brands expanded their presence online through social media, such as Facebook and Instagram. “It’s really about capitalising on your own followers. That’s the reason why we believe that social commerce is quite an equal playing field for all brands.”

Companies racing to fill roles—this has been the state of HK’s job market as its talent pool continues to shrink year by year. In 2022, the struggle to reel in employees remains to be felt by 85% of companies, according to the Digital Salary Survey 2022 by Robert Walters and Walter People.

HK aims to regain crown as favoured arbitration hub with ORFS bill

Currently, lawyers handling arbitration cases in Hong Kong usually get paid by the hour under standard fees arrangements. But with LRC’s push to finally allow legal practitioners to enter into ORFS, lawyers can structure a fee arrangement that suits the specific client and the specific case.

Hong Kong’s top 50 insurers show a 9.75% surge in assets

With the skies clearing, Hong Kong consumers will still prioritise making sure they have an umbrella handy, a fact that Hong Kong insurers took note of as they ready health and wellness products for 2022. HK’s top 50 insurers’ total assets surged by 9.75% to $709b from $646b.

A new canvas: Why artists are jumping into the NFT space

Artist Lakshmi Mohanbabu would usually get a one-time earning for a piece of art she sells in a gallery. When she took a dive into the space, she realised that she can make much more. Artists can get a percentage of a future resale of their NFT-minted artworks with a royalty fee.

Prepare to go cashless or pay the price

With more consumers planning to drop cash and go fully digital with their payments in 2022 and in years to come, and with one in three abandoning a purchase when not given a digital payment option, small businesses really have no other way to go than shift to cashless.

INSURANCE FINANCIAL TECHNOLOGY INFORMATION TECHNOLOGY
News from hongkongbusiness.hk
Conversational commerce levels playing field for brands online Competing for the best talent in Hong Kong’s shrinking talent pool RETAIL HR & EDUCATION
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THESE GROUPS DRIVE DEMAND IN LUXURY RESIDENTIAL MARKETS

Rental demand in Hong Kong’s luxury leasing market is still being driven by Mainlanders moving to Hong Kong amid the sporadic lockdowns across cities in China.

According to Savills, luxury residential rents have continued to rebound slightly as the city began to mandate a “3+4” hotel quarantine measure in August with a further relaxation in late September to “0+3” while the local epidemic situation has remained broadly contained. Luxury rents on Hong Kong Island recorded a marginal growth of 1.2%, while rents in Kowloon and the New Territories rose by 1.9% and 0.5% respectively.

Here’s more from Savills:

Luxury rents on Hong Kong Island all recorded positive increments in Q3/2022, with Mid-Levels (+0.6%), Pokfulam (+0.6%), Happy Valley/ Jardine’s Lookout (+3.2%), Southside (+1.9%) all posting modest growth.

Demand is being driven mostly by Mainlanders whose focus is on traditional luxury enclaves such as Southside, The Peak and Mid-Levels. Elsewhere, a lack of available stock is helping to support rents and a tendency to renew has resulted in a general lack of movement. In contrast to the luxury markets, rents in the larger housing estates such as Taikoo Shing and Kornhill are falling as the exodus of local professionals overseas has pushed up vacancy.

Luxury property

In Kowloon and the New Territories, luxury apartments generally recorded modest growth over the quarter, with Tsim Sha Tsui/ Hung Hom (+1.8%), Ho Man Tin/Kowloon Tong (2.2%), Sai Kung (+2.2%), Sha Tin/Tai Po (+2.1%), except for Discovery Bay (-2.0%).

PRC students are stimulating demand for shared flats in areas like Hung Hom and Ho Man Tin. Heavy rental declines have been recorded in Discovery Bay as airline housing budgets have fallen dramatically.

Why it’s time to remove cooling measures

Property expert JLL has urged the Hong Kong government to remove the cooling measures in the housing market since it is “no longer overheated.”

Amongst signs that show the market has cooled down include the mass residential prices dropping over 7% year-to-date and average monthly residential sales transactions for the last nine months hitting its lowest level in 20 years, said JLL.

In the first nine months of 2022, only an average of 4,100 flats per month changed hands, lower than the previous low of 4,200 transactions in 2013 when the government introduced the Double Stamp Duty.

With housing prices expected to drop 10% for the year, JLL said borrowers who rely on high LTV mortgages will be at risk of falling into negative equity.

Sales in the luxury markets likewise dropped in 2022, with only 500 flats worth over $20m sold per quarter in the first nine months, 55% less than the average of 1,100 deals in

If the housing prices dropped further, developers are likely to be extra cautious in land bidding

2021 and about 40% lower than the average quarterly transactions in the last five years.

“The down cycle in the housing market has just started and the market will continue to face headwinds.

Although home prices are unlikely to fall off a cliff, the city will probably suffer a prolonged down cycle that we witnessed in 1999-2003 due to interest rate hikes, a reversal in liquidity, weakening global and regional economies, and geopolitical concerns. Housing prices dropped a cumulative total of about 50% from 1999 to 2003, or about 10% a year,” Joseph Tsang, chairman of JLL in Hong Kong, said.

“We expect the prices of mass residential will extend the decline in 2023. If the cooling measures remain amid the backdrop of the global economic downturn and political turmoil, we will see a sharper price correction and rising cases of owners in negative equity,” Tsang added.

Removing stamp duties

Tsang said removing the punitive stamp duties like the Special Stamp Duty and Buyers’ Stamp Duty will help avoid negative equity from becoming an issue in the city again.

“If the housing prices dropped further, developers are likely to be extra cautious in land bidding, which will affect land sale revenue as a result,” he explained.

To avoid developers slowing down their urban regeneration efforts amidst the interest rate hikes, Tsang said the government must remove the Buyer’s Stamp Duty.

“The government can also consider adjusting the levy of Special Stamp Duty only on vendors who had made gains when the flats are sold while freeing the loss-makers from SSD liability,” he added.

In Q2, the Buyers’ Stamp Duty amounted to $410m, the lowest quarterly receipt since the duty was levied in 2014. Meanwhile, Doubled Ad Valorem Stamp Duty dropped to $1.3b, the second lowest following the lowest level recorded in the first quarter of 2022.

The low levels of stamp duties receipt are signs of subdued sentiment among both investors and owneroccupiers, according to JLL.

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Residential sales in the last nine months have dropped to its lowest level in 20 years

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Another in-demand tech talent is in the data sciences. This is because an unprecedented number of organisations and businesses going through digital transformation, and the availability of data and the need for analytics plus data-driven solutions have skyrocketed.

Junior data analysts could earn $20k to $26k, increasing to $30k to $48k when experienced. Junior data engineers earn slightly higher at $30k to $46k, increasing to $50k to $74k for those in a senior role. Principal Data Scientists have the highest pay at $43k to $129k.

Highest earners

The highest salary is within the Crypto, Blockchain and Web3 industries. Head of Marketing in regular tech and digital industries have a salary range of $71k to$167k.

Within the crypto, blockchain and Web3 industries, the same role would be looking at a salary between $100k to $200k. Product Managers within the crypto, blockchain and Web3 industries have a salary range of $60k to $90k.

A similar role as a Junior would be seeing half of that amount, having a salary range between $22k to$40k, whilst a Senior position would be averaging between $50k to $73k.

This is how much Hong Kong’s tech companies are paying their talent

Hong Kong firms’ demand for tech talent is reflected in how much they are willing to pay those with skills, with the pay jump from the highest junior salary to the lowest senior role salary increasing by more than 100%, a report by Grit revealed.

This has not been surprising as, since the pandemic, most companies have prioritised the search for tech talent leading to an increase of IT-job functions search by 35% within various industries in the last year. Meanwhile, the demand for tech talent increased by 18% in the first quarter of 2022 alone.

Front and back end junior developers could earn $20k up to $35k. Those in senior roles could see this salary more than double from $45k to $70k. Meanwhile, junior engineering managers could earn $45k to $70k, increasing to $80k to $150k for those with experience.

Cybersecurity experts and IT

professionals are also in demand as data breaches could cost companies US$4.24m per incident according to the latest cybercrime statistics. In a survey by IDG Research last year, eight out of 10 senior IT security leaders think that their organisations aren’t sufficiently protected from attacks thus creating the demand for skilled cybersecurity professionals. Junior cybersecurity consultants could earn $30k to $45k. This will also double from $60k to $83k for those with experience. Cybersecurity engineers meanwhile earn a starting salary of $25k to $35k. Senior cybersecurity engineers earn about $40k to $60k. Meanwhile, the chief information security officer (CISO) can earn $77k to $205k.

According to the report, across various job functions, the chiefs of the various departments demand much higher salaries than those working in other industries, such as the Head of Legal ($112k to $169k) and Head of Technology ($120k to $200k). Grit said that due to the fast-growing nature of these technologies, employers are willing to pay higher salaries to develop their talent as they look to take the next step in the company’s growth.

“As the competition wages for talent, we have full confidence that individuals have plenty of opportunities to grow, develop and thrive in this booming market. Employers should look to improve their hiring processes to successfully recruit, train and retain their talent. At the same time, employees should keep upskilling to hone their skills and remain up-to-date with current market demands as they work to achieve their ideal job positions and salaries,” Paul Endacott, CEO and Founder of GRIT said.

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There is an almost 100% pay jump from junior to senior roles
As the competition wages for talent, we have full confidence that individuals have plenty of opportunities to grow, develop and thrive in this booming market

The next 3 years will be an inflection point for real estate as businesses rethink the

can support employee mental wellbeing and maintain productivity.

Additionally, the findings showed that 80% of organisations in Asia Pacific agree that quality space is a top priority as high-quality spaces are best suited to facilitate the kind of workplaces, health and wellbeing amenities, and sustainability credentials employees and corporates increasingly need.

The focus for companies will be on investments in quality spaces to ensure the long-term success of hybrid work.

Why the next 3 years are crucial for the office property sector

Companies will look across their real estate portfolios to rethink their office spaces, invest in new technology and prioritise sustainability, as hybrid work becomes more entrenched in corporate culture, according to new research from real estate consultant JLL.

The Future of Work report reveals the trend towards dynamic working continues, with 56% of organisations in Asia Pacific saying that they will likely make remote working available to all employees by 2025 and corporate real estate (CRE) executives saying that successfully operating hybrid work will be the most important strategic priority over the next three years. This includes

exploring flexible space options, with the average proportion of flexible spaces in Asia Pacific expected to grow between now and 2025.

“The next three years will prove to be an inflection point for real estate as businesses plot their future path and rethink the purpose of their portfolio,” said Jordi Martin, CEO, JLL Work Dynamics, Asia Pacific. “The changes accelerated by the pandemic represent an opportunity to pause, think about a long-term real estate strategy and how it aligns with future business priorities.”

According to JLL’s research, the shift to hybrid work has become a marker of change in the workplace, placing greater emphasis on how companies

HOW THE 0+3 ARRANGEMENT WILL AFFECT HK’S INDUSTRIES

The new 0+3 quarantine arrangement that scraps the compulsory hotel quarantine for inbound travellers from Taiwan and other overseas places is expected to leave a positive impact on several industries in Hong Kong, including the real estate market.

According to JLL, the new setup will positively impact the leasing market.

“An open border will facilitate companies to resume/proceed with their deal diligence processes regarding real estate requirements. We believe many such activities have been put on hold awaiting a clearer roadmap to re-opening,” the real estate expert said.

Since entry requirements got eased, JLL said Hong Kong will be able to regain its attractiveness to multinational companies and mainland firms to set up or expand its presence in the city.

“A pick-up in office leasing activities will lend

support to the rental market,” said JLL. Apart from the office market, JLL said the retail market will also benefit from the easing of quarantine, albeit “minimally initially.”

Jeffries echoed this, saying that whilst the relaxation is a “piece of positive news” for the market, it is unlikely to help retail sales in the short term given the shift in mainland Chinese consumer behaviour.

“Short term, brands and retailers expect domestic spending to be affected by the policy with local people travelling or local consumers save for travelling,” Jeffries said.

Meanwhile, the aviation sector also welcomed the relaxation, with Cathay Pacific saying the latest measure will help boost sentiment for travel.

According to the airline, the adjustment will facilitate “gradual resumption of travel activities and strengthening of network connectivity to, from and through the Hong Kong aviation hub.”

“As the office continues to evolve post-pandemic into a destination for collaboration, occupiers will need to continue increasing their investments in creative spaces,” said James Taylor, Head of Work Dynamics Research, Asia Pacific. “Real estate portfolio strategies to enhance social interaction among a geographically dispersed workforce will be more important than ever, and the focus is on organisations to create offices with less me-space and more we-space.”

Environmental and social aspirations will shape portfolio transformation

With buildings accounting for over 60% of carbon emissions in cities, organisations face ever increasing pressure to deliver clear outcomes in the race to net zero and create social value through real estate. That means sustainability strategies have a direct impact on real estate decisions, with 71% saying they are likely to pay a premium for green building credentials in the future.

HONG KONG BUSINESS | Q4 2022 9 FIRST
purpose of their portfolio
Domestic spending expected to be affected by the policy Over half of APAC firms say remote working is likely to be available to all by 2025 James Taylor Jordi Martin

KOWLOON WEST TO BECOME THE HEART OF

Businesses looking to establish or upgrade their office should start looking into Kowloon West where multiple developments are underway.

A report by Colliers said Kowloon East is expected to become one of the fastest-growing Grade A office submarkets in Hong Kong, especially with the construction of two government projects, Lantau Tomorrow Vision and Northern Metropolis.

The two mega projects will pave the way for different office clusters to develop around Kowloon Station, Cheung Sha Wan and the New Development Areas (NDAs) in the New Territories.

Currently, there is only one Grade A office building in the Kowloon Station Area, which is strategically located at the junction of the Tung Chung Line, Tuen Ma Line and cross-border XRL.

In the next five years, it will supply the second-highest amount of new Grade A office facilities (2.4 million sq ft) after Kowloon East, equivalent to 17% of the total new Grade A supply in Hong Kong between now and 2026.

The next Grade A office Colliers added that 29% of the next five-year Grade A office supply (202226) will also come from Kowloon West. The supply’s total size in the district is also expected to increase from 6 million sq feet in March 2022 to 9 million sq feet by 2026.

By 2026, the district will also have 11% of the entire city’s Grade A office stock.

“The focus of the city’s future developments is going to shift from the East to the West over the next two decades amidst the bigger integration within the GBA development. We believe the emerging office clusters in Kowloon West will become alternative flight-to-quality locations, supported by the relatively low rents.

F&B’s performance the highest post-pandemic

Restaurants in Hong Kong were slightly more confident in their outlook for the food and beverage (F&B) industry, increasing to 39% in the second quarter of 2022 from 34% in the previous quarter, according to the Deliveroo Q2 2022 Restaurant Confidence Index.

In a statement, Deliveroo said Hong Kong restaurant posted the highest business performance satisfaction score in over two and a half years if 6.4 from 5.3 in the previous quarter. Around 36% were also more hopeful about the economic environment, up from 32%.

Many restaurants cited the consumption voucher distribution in April as a key factor in boosting business, with 65% of those surveyed believing that their revenue slight or significantly rose during the quarter because of it.

With the increase in spending due to the vouchers, 48% of F&B owners are considering promotional or marketing plans in line with the second phase of the Consumption

Voucher scheme in the third quarter. Around 23% of restaurants already have promotional plans.

“Although the previous few months have undoubtedly been difficult due to the fifth wave of the epidemic, Hong Kong is still on the road to recovery, and we are hopeful that social distance-inducing policies will be further relaxed in the coming months,” said Deliveroo Hong Kong General Manager Andrew Hui.

“We are committed to helping restaurant partners make the most out of new opportunities in the market while preparing for any potential challenges under the evolving COVID situation,” he added.

F&B rebounding

The report also found that dine-in business performance improved in the second quarter, with 55% claiming their revenue from dinein business significantly or slightly rose compared to the previous quarter, whilst 19% said it remained unchanged.

Around half or 48% said they increased their staff during the quarter, and 55% have planned to raise wages in the third quarter to retain employees. It also found that 42% of restaurants were planning to hire more staff, and 26% planned to open new branches in the third quarter.

Meanwhile, many restaurants cited operating costs, including food ingredients and rents which are both at 39% as the highest pressure they experience over the spring and early summer months. This is followed by labour costs with 23% reporting a pinch in staff salaries.

Around 74% were very or slightly worrying about a rebound in COVID cases with the revival of longer dining hours and easing of social distancing measures, according to Deliveroo.

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The performance satisfaction score of 6.4 is the highest posted in two and a half years
HK’S OFFICE MARKET
The real question is whether HK can keep its relative importance as an intermediator under the evolving global trend
HONG KONG BUSINESS | Q4 2022 11

How financial institutions can overcome the booming demand for ESG roles

Data from portal Indeed showed that ESG job offers in Hong Kong soared 442% in 2022.

recruitment agencies given its cost.

“I review job boards on a regular basis, whether that be what’s being posted on LinkedIn, Jobs DBE, Financial Careers. It’s interesting to see the repetition in which organisations are posting the role, which leads you to believe they’re not filling them; hence, the role continues to be recycled until they find the right talent,” the HR expert said.

Currently, most ESG jobs offered in Hong Kong are coming from accounting and consultancy firms, as well as financial services firms.

This was echoed by Wisely Wong, Business Director at Hays, adding that accounting firms like the Big 4—EY, KPMG, Deloitte, and KPMG—are expanding ESG hiring actively in Hong Kong “in response to the increased requirements from corporates and institutions who are facing tougher reporting rules.”

In April 2022, Deloitte even announced that it will “offer a robust curriculum of sustainability training courses to all 345,000 professionals along with its clients and suppliers.”

Hong Kong’s finance sector has never been truly invested in the environmental, social, and governance (ESG) piece, according to HR expert Steve Parkes. “Strong ESG people” across the globe, who could have been considered to fill the roles are already less interested in Hong Kong for reasons like politics and the city’s pandemic response.

“There’s not enough talent. I don’t think the market was prepared for the quantity of people that was going to be required,” said Parkes, Senior Partner at Page Executive Hong Kong. According to portal Indeed, ESG job offers in Hong Kong soared by 442% from April 2021 to April 2022.

To strengthen Hong Kong’s weak pipeline of ESG talent, Parkes suggested that companies do not necessarily need to hire employees specifically with ESG-focused. Instead, they can look for individuals who are familiar with looking into the risk profile of a business.

Parkes said companies can also take current talent and upskill them. They should start asking whether they have employees who can take on the ESG responsibility.

“ESG has certain components, be it risk or compliance related. Oftentimes, people in these capacities are then shifting into an ESG role from an internal perspective,” said Parkes.

The harder way for Hong Kong to address the issue of the widening gap between demand and supply of ESG talent is to “home grow,” which will be up to the universities, said Parkes.

Unable to fill roles

Apart from lack of talent, companies struggle to fill their ESG roles because some refuse to seek help from

The market was not prepared for the quantity of people that was going to be required

More than a compliance Compliance regulation being the main driver for most companies when making ESG decisions, as stated by a PwC study, is worrying and concerning, according to the Page Executive expert.

“There’s a term being used called greenwashing, meaning organisations are painting a very pretty picture of either what they have internally, or what they’re doing, from a financial perspective,” Parkes said.

“Right now, we’re starting to see progress in organisations, but what’s the longevity of this?

What’s the sustainability of this? What is the true rationale for it? Are we truly trying to make our world a better place? Or are we just doing it to fill up a certain corporate void?” he added.

Wong, for his part, added that the benefits of assigning ESG specific roles goes beyond compliance of regulatory requirements.

According to Wong, creation of ESG roles will also leave a positive impact on the labour market.

“More roles will be created with more opportunities to come. For example, the front office would require more coverage bankers with relevant sustainability knowledge to step up the game in order to further educate ESG knowledge to their customers,” Wong said.

“There will also be an increase in issuance of Green Bonds, leading to an increased demand for investment bankers with sustainable finance experiences. Research analyst and data analyst will also be sought after as climate change and other sustainability factors will require data and studies to value investment projects. Risk experts would also be needed to further verify and value these investment projects,” he added.

12 HONG KONG BUSINESS | Q4 2022
HR BRIEFING
Companies struggle to fill their ESG roles because some refuse to seek help from recruitment agencies Wisely Wong Steve Parkes

Tencent’s

approach is

Tencent Holdings Ltd

TheCOVID-19 pandemic imposed tremendous challenges on global businesses, including supply chain disruption, the maintenance of normal business operations, as well as employee management under remote working scenarios.

As the pandemic gradually eases in 2022, more and more companies around the world are starting to embrace digital transformation. On the one hand, digital technologies have been proven to increase enterprise agility and prepare companies for the next black swan event. On the other hand, enterprises empowered by digital technology are believed to be in a better position to capture emerging industry opportunities. What Tencent has done may shed light on how companies can utilise digital technology to strengthen their human resource management and boost enterprise agility.

Living in the digital age, it is imperative for company management to be able to quickly understand changes and make swift strategic transformation decisions. It is also necessary to ensure that employees have the ability to adapt to development shifts in the digital age and follow management decisions to rapidly promote business-level transformation.

This requires enterprises to establish a scientific and efficient digital system to meet the new human resource management challenges brought about by the digital age, which can be translated into the adoption of “strategy digitisation” and “service

productization.” By doing so, enterprises can embed data-based thinking into their strategic decision-making and subsequent implementations while efficiently aligning action plans between senior executives and regular employees.

In addition, the productisation of HR services can also improve the timeliness and coverage of internal strategy communications and help to dynamically maintain a healthy talent structure at an organisational level, such as by designing specific training to enhance employees’ skillsets and putting talented people in more suitable positions.

A comprehensive HR strategy

Based on research conducted by a team from Guanghua School of Management, Peking University, and researchers in Tencent Social Research Center and Tencent HR Technology Center, Tencent’s approach was to build a comprehensive data and analysis system, and implement a “service productization” strategy in HR management, so that senior executives can have access to better data to assist them with strategy and HR management decision making, and also ensure the accuracy and efficiency of strategy formulation and execution. At the same time, taking employees as users and transforming different modules of HR services into digital products can help employees increase their efficiency in the workplace, and gain necessary work skills that they don’t already have.

Tencent built a human resource data management system internally and, on its basis, further built out a data-based strategic decision-making mechanism. The company set up a management committee to oversee HR data governance. By centralising talent with data management and at the same time matching business demands with employees’ strengths through a talent indicator program, internal operational efficiency and cross-team collaboration were greatly enhanced. Through this centralised data governance mechanism, supplemented by the identification of talent deficiencies, digital tools equip employees with action guides and targeted training that better match seniorlevel strategies, which are then transformed into efficient and agile strategy execution.

Tencent’s goal management system was a great example of implementing the strategy of “service productization.” In the early “customer engagement” process, Tencent noticed that employees attached great importance to the timing of different action goals. However, many employees also had difficulties aligning their own goals with organisational ones. After a revamp and upgrade, the new goal management system allows employees to communicate and update their action goals from time to time through an automatic QA system, which also allows members of one team access to each other’s plans. The resulting instant and personalised feedback can greatly improve employees’ sense of participation and enthusiasm. At the same time, the optimisation system makes individual goals visible among employees in one team, so that they can better align their goals with the broader team and, furthermore, with the whole company.

HONG KONG BUSINESS | Q4 2022 13 MEDIA & ENTERTAINMENT
to implement a “strategy
HR management.
Tencent leverages digital
Additionally, in order to refresh the process of internal knowledge sharing, Tencent established an “expert” platform for employees to exchange and learn. The platform recruits experienced employees who are willing to share knowledge and provide knowledge sharing to colleagues in need, which improves the efficiency of knowledge input in learning and sharing. Teams and personnel can share open and productive conversations internally, facilitating the personal growth of employees as well as the development of the entire organisation. TENCENT BUILT A COMPREHENSIVE DATA AND ANALYSIS SYSTEM, AND IMPLEMENT A “SERVICE PRODUCTIZATION” STRATEGY IN HR MANAGEMENT, TO ENSURE THE ACCURACY AND EFFICIENCY OF STRATEGY FORMULATION AND EXECUTION
digitisation”and“service productization” strategy in
How
technology to strengthen HR management and enterprise agility

Why tax deduction on domestic rents is not really a win for tenants

Under a newly passed bill, up to $100,000 can be deducted from a tenant’s annual rent.

When the Inland Revenue (Amendment) (Tax Deductions for Domestic Rents) Bill 2022 was passed by the Legislative Council, it was called an “ease to the burden” of taxpayers who are renting; however, a law expert argues that the bill is not necessarily a win for tenants.

“Whilst it might look like tenants will be the real winners here, the reality is that only a small proportion will reap the full benefit,” Janice Yau Garton, Partner at Stephenson Harwood, told Hong Kong Business.

According to Garton, many taxpayers will still not be able to fully claim their actual cost of rent given the deduction ceiling of $100,000 for each year of assessment.

“Given the high costs of living in Hong Kong, especially with regards to property, the deduction ceiling may be too low for many taxpayers,” Garton said, adding that property costs in Hong Kong are amongst the highest in the world.

Garton further said that a $100,000 deduction amount for annual rent is only equivalent to a monthly rent of just over $8,300.

“Hopefully, the deduction ceiling will be raised for future tax years,” she said.

The law expert also raised the possibility that employers might also choose to remove their rental reimbursement programmes to let the government “address the cost of housing instead.”

In the short- to medium-term, however, this will be unlikely given that the market for top talent is as “competitive as ever.”

Garton also countered the government’s estimate that 430,00 taxpayers will benefit from the bill, given that taxpayers benefitting from rental reimbursement programmes with their employers will not be able to claim any further deductions for rent paid.

“Many taxpayers already enjoy a more favourable tax treatment offered by their employers under existing rental reimbursement programmes, some of which offer deductions of up to 50% of an employee’s salary,” the law expert said.

Apart from taxpayers benefitting from rental reimbursement programmes, the bill will also not benefit individuals who are provided with a place of residence by their employers.

Garton said the rule applies to the individual’s spouse. The spouse likewise should not have accommodation be provided by their employer.

To qualify for the tax deduction, Garton said the taxpayer must have a stamped tenancy agreement and live at the premises.

Taxpayers, including their spouses, must also not be the owner or be an “associate” of the owner of the property they are living in.

To claim their tax deduction, Garton said taxpayers must “complete the declaration as part of the tax return.”

“As the Amendment covers the year of assessment commencing 1 April 2022, this option is already available under a newly added Part 10A of the most recent tax return form,” she said.

“The IRD can ask to see a copy of the tenancy agreement and/or evidence of rental payments, so a taxpayer should keep all relevant documents such as originals of the lease/tenancy agreement and rental receipts,” the law expert added.

Property coverage

In terms of property type, Garton said the bill covers only the private housing market, which means that no deduction will be allowed for public housing tenancies with the Hong Kong Housing Authority or the Hong Kong Housing Society.

“Essentially, most types of domestic premises that are rented through the private housing market are covered, although the ordinance states that only domestic premises are allowed,” she said.

Under the bill, domestic premises were defined as “a building, or part of such a building, including a bedspace, cubicle, room, floor and portion of a floor” which is not illegal and is being used wholly or partly for residential purposes.

Whilst the bill does not cover public housing, Garton believes that it won’t affect the demand in the market.

“Public housing will still be in strong demand, even though this group of tenants would not enjoy any rental tax deductions, because public housing rents remain low, an average of around $2.3k per month,” she said.

As for the private rental market, Garton said the effect may be muted given that the bill does not provide “enough of an incentive” to make a significant difference to the market overall.

14 HONG KONG BUSINESS | Q4 2022
LEGAL BRIEFING
Given the high costs of living in Hong Kong, the deduction ceiling may be too low for many taxpayers
Public housing will still be in strong demand even though this group of tenants would not enjoy any rental tax deductions Janice Yau Garton C M Y CM MY CY CMY K

How key aviation players are pushing the industry for takeoff

The HKIA told Hong Kong Business that it has projects like SKYCITY to support the aviation industry’s recovery.

up to support the aviation industry’s recovery. These projects include SKYCITY, which houses offices, hotels, Hong Kong’s largest retail, dining, and entertainment complex.

Through these development projects, HKIA aims to raise its capacity and enhance its functionality, and eventually transform itself from a city airport to an airport city.

Cathay announced that it will hire more than 4,000 front-line employees, including some 2,000 cabin crew

Whilst reports say that Hong Kong has lost its aviation hub status, key players in the city remained confident in the future of the industry. What gave Cathay Pacific, Hong Kong’s flag carrier, “great confidence for the long-term future” of the industry is the HKSAR government’s removal of the hotel quarantine arrangement for locally based aircrew and travellers.

“These adjustments will help boost sentiment for travel, thereby facilitating the gradual resumption of travel activities and strengthening of network connectivity to, from, and through the Hong Kong aviation hub,” the airlines said.

“As such, we are now projecting by the end of the year to be able to operate about one-third of our pre-pandemic passenger flight capacity—about double the passenger flight capacity we operated in August—and about two-thirds of our pre-pandemic cargo flight capacity,” a spokesperson from the airlines told Hong Kong Business.

In August, the airline saw an 87.6% year-on-year increase in its total number of passengers and a 82.7% YoY jump in its revenue passenger kilometres (RPKs).

In a previous statement, Cathay’s Chief Customer and Commercial Officer Ronald Lam said adjustments made to quarantine measures boosted

These adjustments will help boost sentiment for travel

inbound traffic to its home hub.

“This was particularly so for longhaul traffic from the US, Canada, and Europe,” Lam said.

Apart from the lifting of hotel quarantine measures, the airlines said the recent commencement of flight operations on the Third Runway at Hong Kong International Airport (HKIA) also gave the industry a confidence boost.

“Under the National 14th Five-Year Plan, Hong Kong has an important role to play in the overall development of the country. Notably, it reinforces the importance of strengthening the Hong Kong international aviation hub. The recent commencement of flight operations on the Third Runway at Hong Kong International Airport gives us great confidence for the long-term future of the hub,” the airlines said.

The airlines’ high hopes for Hong Kong’s aviation industry were shared by the HKIA.

“Despite the challenges posed by the pandemic, Airport Authority Hong Kong (AAHK) is confident in the long-term development of the aviation industry and the hub function of HKIA,” a spokesperson from the HKIA explained to Hong Kong Business.

Apart from the Three-runway System project, HKIA said it also has a myriad of development projects lined

E-commerce lifts aviation Whilst passenger traffic is still on its path to recovery, HKIA said it is being supported by high demand for e-commerce and transportation of medical supplies.

“The efficient air cargo community has worked together to raise the capacity to cater to the demand, so as to consolidate our leadership position in a challenging environment,” the spokesperson said.

In 2021, HKIA saw a throughput of 5 million tonnes, making it the busiest airport in cargo operations in the world.

HKIA, however, underscored that it had already seen a gradual increase in passenger traffic following the government’s relaxation of the quarantine requirements for inbound travellers.

In August, HKIA welcomed a total of 479,000 passengers, representing a growth of 116.3% YoY. Combining the first eight months of 2022, the airport handled 1.7 million passengers, a 141.5% YoY jump.

On a 12-month rolling basis, the airport handled 2 million passengers, marking 121.9% year-on-year growth.

In response to the increase, HKIA said the AAHK has begun working with its partners to prepare for the recovery of flights and passengers.

Cathay, for its part, has started a comprehensive recruitment plan to meet its operational needs over the next 18 to 24 months.

The airline announced that it will hire more than 4,000 front-line employees, including some 2,000 cabin crew.

16 HONG KONG BUSINESS | Q4 2022
REPORT: AVIATION
HONG KONG BUSINESS | Q4 2022 17

Here are five bad habits in insurance according to HK’s insurance regulator

These habits drag down Hong Kongers’ insurance literacy rate.

For a market ranking first globally in insurance penetration according to research firm Swiss Re Institute, it is surprising that Hong Kong’s insurance literacy rate stood only at 52%.

In the 2022 Report on Insurance Literacy Tracking Survey (ILTS) in Hong Kong 2021 by the Insurance Authority (IA), it was found that most, Hong Kongers are moderately literate when it comes to insurance.

“There was a general understanding about policyholders’ rights, insurance principles and product features, but limited knowledge of risk exposure and protection needs,” the IA said.

Bad insurance behaviours

Respondents of the ILTS were analysed based on the three dimensions of insurance literacy— knowledge and skills, attitude, and behaviour. The results revealed that bad insurance behaviours exhibited by Hong Kong citizens is the culprit dragging down the insurance literacy rate of the city.

For example, the survey revealed that when it comes to buying insurance, 72% of respondents relied on the advice and experience drawn from family members or friends instead of insurance or financial

professionals. IA identified this as the first behavioural bias—over-reliance on informal information sources.

Consumers who are overly reliant on their family or friends for information and advice is a sign of bandwagon effect.

“People often want to be on the winning side when they make a decision. As a result, they look towards their family or friends to see what is right and then jump on the bandwagon,” the IA explained.

The second behavioural bias is too much focus on promotions. Promotions offered by insurance companies affect consumers’ decisions via price complexity and misdirected attention. The former means consumers find it challenging to calculate true prices when they face multiple prices, such as discounts and add-ons, leading to confusion and increased possibility of errors. The latter means promotions reduce consumers’ motivation for mental effort, resulting in choices becoming less deliberate but driven by emotions and feelings.

Most consumers also seldom shop around for better insurance deals when purchasing or renewing insurance. Nearly half of the policyholding respondents were influenced

by promotion campaigns such as premium discounts, complimentary movie tickets, and healthcare services offered by insurers. On the other hand, a mere 15% of general insurance policy-holding respondents reviewed renewal terms carefully and shopped around when they renewed their policies.

Next is passiveness and inertia. The complexity of terms and conditions makes policy comparison very time-consuming. Moreover, policyholders often renew their policies with their current insurers due to a perception that switching is risky and with preference for the familiar rather than the best deal.

Lastly, most consumers do not take the time to read the terms and conditions of their policies as many find this too long and timeconsuming in addition to being written in complex legal languages. The perception most consumers think is that no one reads T&Cs or that they have no choice but to accept them thus there is no point in reading them.

Only 32% of policy-holding respondents read and study T&Cs before committing to acquire insurance coverage. 20% read neither policy details nor brochures. The rest simply focused on brochure information and relied on verbal advice from agents, brokers, family members, or friends.

Similar results

Talking to Hong Kong Business, Danny Lee, Chief Product Officer at Manulife Hong Kong and Macau said the key findings of the IA’s study mirror a study they done in February which revealed that most Hong Kong taxpayers do not still do not fully understand the characteristics and benefits of tax-deductible products.

Manulife’s survey asked Hong Kong taxpayers about their knowledge of a trio of tax-deductible solutions: Voluntary Health Insurance Scheme (VHIS), Qualifying Deferred Annuity Policies (QDAP), and Tax Deductible Voluntary Contributions (TVC) under Mandatory Provident Fund (MPF) schemes.

18 HONG KONG BUSINESS | Q4 2022
REPORT: INSURANCE
People often want to be on the winning side when they make a decision
Danny Lee
(ia.org.hk)
Insurance Literacy Scores Source:
Insurance Authority
HONG KONG BUSINESS | Q4 2022 19

STARTUP ECOSYSTEM

Improving Hong Kong’s startup ecosystem

Microsoft created an incubation programme in partnership with the government, corporate venture capitalists, and key stakeholders.

Even with an already vibrant and healthy startup ecosystem in Hong Kong—housing 3,750 startups, of which, 18 are unicorns— the industry is not without challenges. Microsoft Hong Kong pin-pointed three pain points for these newly formed local businesses.

According to Kelvin Tse, Director for Global Partner Solutions at Microsoft Hong Kong, startups are challenged by the lack of technological stacks to support and build their businesses; a marketing strategy that will introduce them to their target customers and promote their products; and escalation for them to expand their reach internationally.

Despite these, Microsoft believes that Hong Kong is the heart of information technology. With the push from the government to nurture the space, Microsoft developed an incubation programme—an interconnected system called

Microsoft for Startups Founders Hub.

“We joined hands with key stakeholders like the Hong Kong Science and Technology Parks Corporation (HKSTP), Cyberport, universities, and corporate venture capitalists to strengthen the startup ecosystem. Together, we plan to enhance Hong Kong’s status as an international IT hub,” Kelvin said.

Tech-based solutions

Currently, Microsoft has allotted around US$300k ($2.35m) worth of benefits for all stages of startups that have scaled and need to develop a robust business model.

In the hub, startups can access Microsoft products for free and build their own products using Microsoft Azure, Microsoft’s cloud computing service for application management.

Other accessible technology in the hub include Microsoft 365, Teams, Power Platform, and Power

Automate Dynamics 365, GitHub Enterprise, LinkedIn, OpenAI, Ansarada, and Drata.

“Startups can build their infrastructure or run their solutions on an integrated secure Cloud solution powered by Microsoft. Our education and training resources also help to upskill founders and their staff,” Kelvin said.

There is also an open AI platform in the hub for most tech startups or those creating AI-powered products. This platform gives them a pre-built data model they can take and recreate.

Additionally, through the hub’s technological platform, startups can automate their business processes, automation thus making sure that they become part of the ecosystem where technologies are stacked to support each other’s businesses.

“Accessing our ecosystem is more than a marketing strategy to enhance their market exposure, startups can explore business opportunities with Microsoft and our sizable corporate customers. Startups will also have a chance to expand into the international market with Microsoft’s support when they have demonstrated customer success,” Kelvin said.

An example of a successful startup from Microsoft for Startups Founders

20 HONG KONG BUSINESS | Q4 2022
Microsoft joined with key stakeholders like HKSTP, Cyberport, and more to strengthen Hong Kong’s startup ecosystem (Photo courtesy of Web Summit via Flickr)
We plan to enhance Hong Kong’s status as an international IT hub

Hub is Clearbot, a company that makes AI-powered self-driving boats that collects trash from the ocean, which recently won a contract with Hong Kong property firm Sino Group.

Open to all

For the startup accelerator program, Kelvin said they are not targeting any specific segment.

“Anyone with an idea can just use their LinkedIn profile to apply online and within five to seven days, [they] will get feedback from us,” Kelvin explained.

Microsoft uses a back-end engine that verifies each application and determines at which stage the startup is currently. Then they identify the type of funding or support the startup is eligible for.

“Our Founders Hub is built for founders at every stage. Our technical experts are prepared to help startups and offer guidance at any development stage. For founders’ backgrounds, we see both fresh graduates and mature professionals are eager to develop their entrepreneurship,” Kelvin said.

Currently, Microsoft has 100 startup founders enrolled in the program in Hong Kong, most of them in the fintech or retail sector. They are eligible for a global mentorship program, where they can get the advice of Azure technical experts at any stage of their business

implementation. Also available are the curated learning and content from the Microsoft for Startups

Founders School, which aims to help founders understand how to reach their business goals and sharpen their technical development ability. Startups participating in the hub can also forge connections with a broad customer base, Microsoft said.

Why Hong Kong

“We can see the government continues to allocate funding and resources to nurture local startups to grow. The Hong Kong government is committed to increasing research and development (R&D) spending from less than 1% of the gross domestic product (GDP) to more than 1.5%

STARTUP ECOSYSTEM

this business year. We can still expect massive funding resources injected into different universities, incubators, or corporate ventures,” Kelvin said.

Kelvin also observed that startups in Hong Kong are not just focused on making money, but on making a difference as well.

“[Hong Kong startups] have a big ambition to do some social good and create a positive impact in terms of ESG and sustainability,” Kelvin explained.

One example is a fintech startup called Know Your Customer, which, as the name implies, is a company focused on solving pain points in KYC and providing anti-money laundering process automation. The startup runs its entire platform using Microsoft Azure with AI and machine learning.

Microsoft managed to connect Know Your Customer with KPMG, one of the big four accounting firms in Asia. The two managed to go to market together by providing an end-to-end solution that lets financial firms comply with market regulations.

Aside from fintech, e-commerce, professional services, and logistics, Microsoft said they are seeing more growth for startups in terms of property tech, education tech, health tech, and sustainability tech.

Kelvin reiterated that through the Microsoft for Startups Founders Hub, Microsoft Hong Kong is committed to investing and supporting the startup community to grow and learn together and become a better, improved ecosystem.

HONG KONG BUSINESS | Q4 2022 21
More than 40 HK startups participated in the “Microsoft for Startups Founders Hub” programme (Photo courtesy of News.Microsoft.com)
Hong Kong startups have a big ambition to do some social good and create a positive impact
Through the Founders Hub, Microsoft HK is committed to supporting the startup community to grow and learn together and become an improved ecosystem Kelvin Tse

STARTUP

SleekFlow allows online sellers to offer checkout on social media chat boxes

Through the platform’s One Click Checkout feature, online buyers do not need to visit or be redirected to a third-party website to complete their purchase.

When sellers receive orders through social messaging apps, they typically redirect buyers to a website or another platform to check out their orders. But with e-commerce platform SleekFlow, these steps become unnecessary as online sellers can directly collect payments through chat, which, in turn, allows businesses to easily convert their prospective customers into paying customers.

“We have a feature called One Click Checkout. The buyers can just DM (direct message) the agent, and they will be given a payment link. Without even logging in, they can receive an OTP (One Time Password) and checkout directly on the social media platform and have the goods delivered to the home,” CEO of SleekFlow, Henson Tsai, told Hong Kong Business in an exclusive interview.

Currently, SleekFlow allows checkout on WhatsApp, Instagram, Facebook, Telegram, Viber, and WeChat. It plans to add iMessage, and even TikTok, to its list of platforms in the future. “We’re seeing exponential growth [of e-commerce] in short videos or livestreaming in different countries,” said Tsai.

Data from Sprout Social showed TikTok, Instagram, and Whatsapp are the top social media platforms where most Millennials and Gen Z shoppers make their purchases.

Based on SleekFlow’s statistics, 20% of e-commerce journeys are completed solely on social media. The number is growing by 34% every year exponentially. According to Tsai, the market size will even reach three trillion in 2028.

Managing better conversations and conversions

SleekFlow also helps sellers, especially large ones, manage their conversations with customers by “segmentation and intelligent classification” of their concerns which can help companies in their workflows.

“Before, when companies try to

collect data from social media, they put everything into an Excel sheet, and on the next day, they have to distribute manually to different kinds of agents to follow up with the leads,” Tsai shared.

Through SleekFlow’s namesake SaaS software, Tsai said brands can help manage conversations, orders, payments, and their products across different social channels.

Data from previous conversations with customers can also be used by sellers for their future campaigns. “They can send out automation, targeted messages, birthday promos, to actually convert the customers,” said Tsai.

Tsai said brands can subscribe to use SleekFlow’s solutions for as low as US$70, whilst multinational companies would usually just need to pay US$20,000.

“We charge our customers based on how many customer contacts they have, and how many agents, sales or support agents are using our software,” he said.

Future plans

To further improve its solutions, Tsai said SleekFlow is polishing and expanding its solutions like order management to include post checkout experience.

“We want to provide a full suite of features like payment and commerce, booking, inventory, and even logistics,” added Tsai.

The Alibaba-backed startup is also eyeing to expand its services in the United Kingdom, France, Netherlands, and Germany.

Currently, the customer experience platform has services in Hong Kong, Singapore, and Malaysia. Amongst its clients include Lalamove, foodpanda, and Bossini.

Tsai said SleekFlow will use its US$8m funding it recently bagged in a Series A round led by New York-based investment firm Tiger Global Partners in making its plans come to life.

Tsai said SleekFlow will continue to focus on conversions and stick to its goal of “driving revenue for brands on day one.”

22 HONG KONG BUSINESS | Q4 2022
Currently, SleekFlow has services in Hong Kong, Singapore, and Malaysia (Photo: SleekFlow team)
We’re seeing exponential growth of e-commerce in short videos or livestreaming
Henson Tsai

How AiR World drives more foot traffic to businesses with ‘metaverse-to-go’

Users visit their partner malls that serve as a gateway to the metaverse 3 to 5 times a month.

No danger

Whilst AiR requires players to go out and experience metaverse, Kwong assured that players are safe when they do so because all location gateways are places where a person would usually visit.

“The gameplay happens naturally throughout one’s life and everyday experience. We’re not really asking the players to go somewhere dangerous or in the woods. We’re basically just asking our players to live their lives and along the way, when they go to a shopping mall they might encounter some of our metaverse gateways in which they can easily access and enjoy with our mobile app,” Kwong said, adding that the AiR metaverse’s concept is “lifestyle gaming.”

Remember the phenomenon that was Pokemon Go, and how it boosted foot traffic in malls all around the world? This was what AiR World founder Gabriel Kwong has been doing for local businesses in Hong Kong, but he did it by incorporating the latest talk of the town - metaverse.

Kwong and his team created a metaverse-to-go gaming platform where real-life, physical locations act as a gateway to another dimension of AiR’s virtual world.

“AiR means ‘Adventure In Reality.’ So what I’m trying to do is, I want to add adventure elements in the form of gamification into real life. We’re placing this metaverse experience into the real world,” Kwong told Hong Kong Business.

“Let’s say you go to a fast food shop chain. On the tray, you will see a paper with a message ‘Why don’t you come to Burger Land?’ and a QR code. By scanning that QR code through the AiR metaverse mobile application, users can play some games, collect virtual items that can also win them a free burger from the restaurant.To the business that means conversion, and to the consumers it’s a fun way to earn a free burger” Kwong added.

Kwong said players can also collect virtual items in one location and use it in another gateway.

“For example, in the Burger Land, you might be able to collect some seeds which can be used in the Farm Land, located in another shopping mall. These seeds, when planted, might grow into a fruitbearing tree. The fruit you harvest from that tree has corresponding points which can help you redeem, let’s say a parking coupon.”

True to their claim of driving foot traffic, Kwong said a single user of their platform would visit their partner malls at least three to five times a month to access their metaverse gateways.

“People don’t visit shopping malls that often, and if they do, it’s likely just once every two to three months,” Kwong added.

As of August 2022, AiR metaverse has 10,000 active users and has recorded close to 100,000 QR code scans which according to Kwong means that users are really going to the physical gateways.

“That’s how gameplay and actual business conversion can work together. That’s how we use our metaverse ecosystem to bring two partners together,” Kwong said.

Kwong also said that one game section would take two to three minutes max.

“You can scan to play something while waiting for your food or waiting for your transportation at the Subway or the bus station,” he said.

The game also has no age restriction. “There’s no game that is not suitable for a younger audience. We actually have parents who told us that their kids enjoy playing simple games at different locations like farming and fishing, etc. There are also senior people who are into collecting benefits from shopping malls,” Kwong said.

He hopes that through the AiR metaverse, businesses and non-crypto savvy users can understand the metaverse better and see its benefits.

“Metaverse to average people or businesses is still more like a PR stint. When people want to know more about what metaverse can do for the general public or businesses, there’s still not a clear indication or a clear path,” he said.

“We wanted to make metaverse practical, meaning there is deliverable. What we’re trying to do here is to be able to lower the entry barrier, to make sure that [businesses see] metaverse as beneficial, more accessible, and approachable,” he added.

HONG KONG BUSINESS | Q4 2022 23
STARTUP
The gameplay happens naturally throughout one’s life and everyday experience
AiR metaverse’s concept is “lifestyle gaming”

Entrepreneur Eric Lai would often go on short business trips in his previous jobs, and what would always frustrate him is how he had to pay for a 12-hour stay, but only stay in the room for less than five hours. This frustration is what led him to create Flow, a booking platform which allows users to book with flexibility.

“I almost never check in at 2 pm, but instead late at night. I also had to check out early in the morning to catch a flight,” Lai told Hong Kong Business in an interview.

Apart from benefitting customers by paying less, Lai also thought that allowing flexible booking would allow hotels to “resell empty times during daytime after a guest checks out,” which, in turn, would help them increase revenue.

“You can think of us as the Booking.com for half-day hotels. You choose a hotel, choose a duration, and choose a check-in time,” Lai said.

“This will be suitable for business travellers, short-haul travellers. For example, people coming from the Mainland or Macau. Most of them do not stay overnight and actually just come and go within the same day for client meetings,” he added.

Data from the Hong Kong Tourism Board showed that in 2019, there were 32 million same-day

travellers who visited Hong Kong coming from the Mainland.

As most of the bookings in Flow are “instant,” users can also book even a day or two before their desired stay, added Lai.

A traditional overnight stay at a four-star hotel would cost around $700 to $800. Rooms available in Flow usually cost $400 for four-star hotels for a four to five-hour stay.

Localised payment methods

Flow offers local payment gateways like Octopus for Hong Kong, GrabPay for Singapore, and ShopeePay for Malaysia.

“We support all kinds of local payment gateways because we see this as an important move. Localisation is our direction,” Lai said. adding that their payment methods are one of Flow’s advantages against other booking platforms.

Other payment methods that Flow provides include VISA, Mastercard, AMEX, Apple Pay, Google Pay, and PayMe.

Flow also does not charge customers extra fees for booking at their site, and only earns through commission from their 300 partner hotels, which include Travelodge Hotels, ibis Hotels, Holiday Inn Hotels, Novotel, Dorsett, Pullman, Intercontinental, and more.

“We charge commission out of every booking that we facilitate for the hotels and there will be no extra fee to be charged from the guests,” Lai explained.

“We provide a web-based portal for hoteliers to easily manage their timeslots and prices, which are then listed on our Flow Website and Flow App, in real-time. We usually advise hoteliers to offer four to eight hour sessions, for example 10 am to 5 pm or 3 pm to 10 pm session, but it can be fully adjustable catering to hotels’ operations,” he added.

Getting three to five-star hotels to partner with Flow was a challenge. For them, more booking during the day means more cleaning up.

“The way we dealt with it was we encouraged them to start with just a few rooms and test it out. After a while, they were okay with the setup. Eventually, the extra revenue that we generated for them was able to cover the extra cleaning costs they incurred,” said Lai.

“Most of our hotels price a session at least 30% lower than an traditional overnight price. Thus, if the room is being sold by two sessions in a day, that already results in 40% more revenue than selling by just one full night, since 70% plus 70% is equals to 140%,” he added.

To date, Lai said Flow has facilitated over 200,000 flexible room bookings and brought US$10M additional booking revenue to their hotel partners.

Not just hotels

Hotels are not the only spaces which locals can book through Flow. The marketplace also allows flexible booking of co-working spaces.

Lai said he wanted to add flexible co-working spaces in Flow given the the rise of hybrid work setup. According to Lai, most of their users are freelanders, or employees who often have client meetings outside. For more on this story, go to https://hongkongbusiness.hk/

24 HONG KONG BUSINESS | Q4 2022
Flow allows for flexible booking for short-haul travellers
2-hour hotel stay and anytime-check-in
Flow, customers can cut 50% to 70% of the price they usually pay for an overnight stay. STARTUP You can think of us as the Booking.com for half-day hotels
On a day trip? This marketplace allows
With
Eric Lai

ANALYSIS: RESIDENTIAL PROPERTY

HK’s poorest to be hit hardest by extended waiting time for public flat

Home size adjustment will be unlikely in the city after the average waiting time for public housing hit a record-high.

Hong Kong’s poorest families hoping to live in more spacious houses can bid their dreams goodbye because the per capita living space issue in the city will not be resolved anytime soon, especially after the average waiting time for public housing was extended to a record-breaking 6.1 years by end of March this year.

Waiting time is defined by the Housing Authority as the “time taken between registration for PRH and first flat offer, excluding any frozen period during the application period.” The 6.1 years was the longest average waiting time in 23 years, according to JLL. By June, however, waiting time was slightly reduced by 0.1 to 6 years.

“As the government has pointed out, the current per capita living space in Hong Kong is smaller than our adjacent cities. Without providing more public rental housing, it cannot effectively solve the per capita living space issue,” said Martin Wong, Director and Head of Research & Consultancy, Greater China at Knight Frank, told Hong Kong Business

In 2021, the average living space of public rental housing (PRH) tenants in Hong Kong was 13.1 square metres per person, which is almost the size of a jail cell.

Longer waiting time

Given the current pace of turnover in public housing, Wong added that the waiting time could even get close to seven years within five years.

This was echoed by JLL in its report, saying that if the pace of new application volume will continue, “the number of pending applications will accumulate further and the average waiting time for PRH lengthen.”

As of March 2022, there are 147,500 outstanding applications for PRH, and the annual average production of PRH in the coming five years is 12,400 units.

JLL added that based on the Transport and Housing Bureau projection, only one-third of the

government’s one-year supply target or 105,000 public flats will be completed by 2026 or 2027, which will still not be enough to house the current 147,500 applicants for PRH. By the end of June, general applications for PRH had hit 144 200, whilst there are 98 400 non-elderly one-person applications under the Quota and Points System.

Shortening the waiting time

To shorten the waiting time, Wong said some private developers have been actively providing land to develop subsidised flats, whilst the government has been investigating ways to provide more public housing like land sharing pilot scheme for agricultural land development and transitional housing development.

Transitional homes are built to accommodate low-income families who were not or have yet to be granted public housing.

By boosting the supply of transitional housing, Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL Hong Kong, said the shortage of RPH can be relieved.

“In view of the efficiency in the construction of transitional housing, we believe the authority may boost the supply of transitional housing in the coming two to three years as a

temporary solution to alleviate the long wait. Whereas in the longer term, sufficient land supply for PRH is the fundamental solution to the housing problems in the city,” Lee said.

Nelson Wong, Head of Research at JLL in Greater China, echoed Lee, saying that by placing residents in transitional housing, they could at least be free from staying in “old and dilapidated units, sub-divided rooms or accommodations in industrial buildings,” which bear “undue safety and security risks.”

As of April 2022, the government said it has enough land to build 19,000 transitional housing units. Of the total, 4,100 are scheduled to be completed in 2022. Amongst transitional projects recently completed was the ‘1 Cheong Sun,’ which offered 205 units.

Measures like transitional housing, however, “would take some time to implement,” according to Wong and would only shorten the waiting period, but not address the lack of public housing.

On the flip side, Wong said the government has been “spending more effort in developing subsidised flats,” which can reduce the waiting time, though not in the short term.

“The waiting time…will be alleviated once the provision is ready in the new development areas,” said Wong, adding that the public-private housing provision ratio in new development areas will be 7:3.

HONG KONG BUSINESS | Q4 2022 25
The current per capita living space in Hong Kong is smaller than adjacent cities Martin Wong Norry Lee Nelson Wong

Fintech funding slows as COVID’s digital hype fades

Valuations of stocks, both public and private, are down 60%, analysts said.

Fintech funding hit a record number of volumes in 2021, with 5,684 fintech deals for a whopping US$210b in total investments garnered during the year–the second-highest annual total ever, according to data from KPMG. Yet come a year later and the global fintech investment market is in a downward trend. Global fintech funding fell 33% quarter-over-quarter to hit US$20.4b — its lowest level since the fourth quarter of 2020, CB Insights reported.

The APAC region was not spared, where apart from a few certain markets, the fintech sector saw investments funnelled towards them shrink in the first half of 2022.

This is not just a fintech problem, analysts told Hong Kong Business. The volatile stock and investment market situation has pushed investors to take the flight to the sidelines and keep their monies close at the moment. Fintechs were not spared from the cautiousness.

Unicorn minting has stilted as investors take a more sanguine view of the business fundamentals of fintech firms

“There’s been a consistent declining trend in 2022 across IPOs, SPACs, and M&A transactions, not only fintech funding. Investors bearing losses from stock market valuations will become more selective in making new investments,” Tzu-Chung Liang, Southeast Asia financial services strategy and transaction leader at Ernst & Young, told Hong Kong Business in an interview.

In particular, the rising interest rates and renewed fears of a recession encouraged investors to focus first on business fundamentals and exercise more caution on where they sink their funds into, said Anton Ruddenklau, Partner and Global Head of Fintech, KPMG International.

“Rising interest rates to combat inflation has added to the cost of capital and therefore the required return on that capital. This has sharpened investor resolve to target fintech firms that are more structurally profitable, are at a later stage in the funding journey or that

have demonstrated operational profitability post scaling,” KPMG’s Ruddenklau noted.

Ruddenklau said that the digital hype that rose during the COVID years has faded, which is also driving down valuations of technology stocks by up to 60% lower.

“Again, this has resulted in investors looking for differentiated technology business models, investing in the next generation of sectoral change or focusing on firms with a clear path to profitability. Unicorn minting has stilted as investors take a more sanguine rather than speculative view of the business fundamentals of fintech firms,” Ruddenklau explained.

Going up

The good news is that the dismal state of funding will likely not last, according to analysts.

“Interest in fintech in the APAC region remains strong, especially those targeting growth markets such as China and Southeast Asia,” EY’s Liang said.

Ruddenklau also forecast that funding will grow as financial technology innovation ramps up over the next seven years.

“Based on the addressable market, we nonetheless forecast financial technology innovation growth to increase over the next seven years, with the market tripling in size by 2030 – circa US$600b annualised funding,” he said.

In particular, Ruddenklau identified three waves of innovation that will sweep through the financial services sector: embedded finance, AI-enabled advice and complex brokerage, and the transformation of risk-taking and balance sheet-based manufacturing.

On the other hand, investors will likely become more selective with higher interest rates unlikely to abate in the near future, Liang said.

Connectivity

Connectivity will be a central theme in the future of banking and finance, bringing investment potential that investors will surely not be able to resist long-term.

In fact, although funding has dipped in 2022 compared to the past year, there are fintech sectors—and markets—that are being positively impacted by the recent market correction, as well as their position as

26 HONG KONG BUSINESS | Q4 2022
ANALYSIS: FINTECH
There’s been a consistent declining trend in 2022 across IPOs, SPACs, and M&A transactions, not only fintech funding

“the next wave of digitisation,” now that COVID has marked the “closure” of the first round of digitisation.

“It would be fair to say that COVID capped off the last ten years of digitisation of financial services with a significant focus on connectivity— this included digital payments, mobile channels, open data and the first wave of blockchain,” Ruddenklau said.

“This year, we have seen several fintech sectors positively impacted by the recent market correction. These sectors are very much aligned to the next wave of digitisation and include Climate & Carbon, Physical Supply Chain, Agribusiness, Regtech, AI, Crypto infrastructure and Crypto Risk software,” he noted.

Outliers

Whilst most markets are on a downward trend, some countries in APAC actually managed to remain relatively stable: Singapore and Indonesia, analysts said.

“Singapore is holding its position well. As the trusted hub for high growth and rapidly digitising Asian markets, the diligence in developing an open, cross-border ecosystem is paying dividends,” Ruddenklau said.

Singapore reported “robust” fintech funding results in the first six months of 2022. This is mostly thanks to receiving a boost in its cryptocurrency funding, according to Ruddenklau.

“Both fintech and investors looking to Southeast Asia’s growth opportunities will likely look at Singapore first, being the strategic entry point. Many start-ups that are headquartered in Singapore have key markets in Southeast Asian countries,” he added.

In a separate report, KPMG said that Singapore even doubled its global market share by deal value to 6.4% in the second quarter from just 3.1% in the whole year of 2021. Its share in the number of deals globally also went up to 5.1% from 3.4%.

The country’s deal sizes have likewise grown up to 10% to average US$43.9m in Q2 22 from US$39.8m across FY2021.

Neighboring Indonesia also bucked the global trend to hit a record-high investment value in the first half of the year.

According to a report by information services provider Fintech Global, investment value in Indonesia from January to June 2022 has already surpassed the previous year, with US$1.8b reported across 51 deals in 2022. In comparison, US$1.6b in investments were received by Indonesian fintech for the full year of 2021.

For the full year, Indonesia’s fintech investments are expected to reach US$3.6b, whilst deal

activity in the country is expected to increase slightly by 5% reaching 102 deals in 2022.

Consolidation in the cards

But even operating in a market as stable as Singapore, some fintech just are not meant to last, analysts told Hong Kong Business.

“There are over 1000 fintech firms based in Singapore, representing over two-thirds of the ASEAN fintech market. Many are too subscale to be commercially viable in the short or medium term,” Ruddenklau said.

“Equally, investors are focusing less on funding start-up phase businesses and more on supporting their laterstage investments. Between the startup funding squeeze and loss-making scale-up firms, acquisitions will be highly attractive,” he added.

KPMG now anticipates consolidation to be concentrated in the last wave of fintechs – those focused on bank-fintech relationships.

“Some fintechs will invariably be left to fail – particularly zombie crypto firms – and others will be acquired by legacy institutions to support their innovation agendas,” Ruddenklau noted.

Liang echoed this sentiment, adding that current financial services players will be the ones to snap up fintech firms with offerings that complement their current digital services.

“Incumbent financial services players and ecosystem players may have the opportunity to start acquiring fintechs for new technology to complement existing products and improve user experience, while valuations are more amicable now,” Liang said.

HONG KONG BUSINESS | Q4 2022 27
ANALYSIS: FINTECH
Investors are focusing less on funding start-up phase businesses and more on supporting their later-stage investments (Photo from QuoteInspector.com)
COVID capped off the last 10 years of digitisation of financial services with a significant focus on connectivity
The next wave of digitisation includes Climate & Carbon, Physical Supply Chain, Agribusiness, Regtech, Crypto infrastructure and Crypto Risk software Anton Ruddenklau Tzu-Chung Liang

Board diversity is more than giving seats to women

Heidrick and Struggles CEO said the first step to diversity is identifying one’s business objectives.

Contrary to what most headlines say, achieving board diversity is not a numbers game of how many seats should be given to women or the young, but rather a fight to eliminate a “groupthink” mindset or thinking and perceiving things the same way amongst executives.

To achieve such a goal, Heidrick and Struggles CEO David Hui said a company’s first move should be to identify issues it wishes to resolve, adding that diverse boards are formed not just for the “sake of diversity,” but also for the company to perform better.

“There’s a lot of different ways and lots of different actions you can take, but you have to have a roadmap or a plan around why you take those actions and what you want to see as a result of those actions,” Hui explained to Hong Kong Business.

In the consumer industry, 40% of board seats are going to women and Hui said this is likely because women are at least 50% of the industry’s potential customers.

“If you’re in the consumer industry, and you’re not recognising that half of your customers are females, that’s a pretty risky approach,” Hui added.

Once the problem is identified, the next step is to look at candidates who can address these problems.

Experience as the first lens

Based on the Heidrick and Struggles study, only 30% of board seats are given to women in Hong Kong. The reason for this is partly due to experience, according to Hui.

Work experience is an important factor in creating a diverse board and is usually the “first lens” of companies when looking to hire or appoint board members.

In the industrial industry, for example, not many females have experience in the industry.

“If you were to look into auto manufacturing and car manufacturing, how many women have 30 years of experience in these industries? So if that was your first lens, you automatically restrict the pool of available candidates,” according to Hui.

Hui added the candidates for board directors are assessed by two filters: having an equivalent level of experience, if not more than those who they will be supervising, and somebody who can devote time to the company.

“Generally that the more experienced people are going to be older, and more likely, therefore, to be closer to retiring or fully retired already. The benefit of this is that these are people who might have the time and the ability to commit to the role,” he said.

“Board work is becoming increasingly onerous, both in terms of complexity and time required.

So inevitably, senior executives who are still working full time will generally opt out of the selection process almost by self-selection, because existing employers are reluctant to

allow or accept that their senior executives can devote time to another company’s interests,” he added

This is why Hui said companies should look at experience in other ways like the teams they have been a part of or even their life experiences.

“We find that board directors who have different life experiences can really look at problems and look at solutions differently,” he said.

“People who’ve worked very much in team environments, versus those who’ve worked in fewer team environments, will tend to lead and tend to comment on leadership in very different ways,” he added.

In the past 12 to 18 months, Hui said companies are also giving more seats to people who have digital experience given the rise of digital transformation across all industries.

“We see that a lot of women who are being placed on boards have experience in that sense—social media, digital security, cybersecurity,” Hui added.

Scarce experienced directors

Hui said one of the reasons for “scarcity” in the supply of experienced directors is because the recommended number of boards a director can serve has been downgraded to four for 10 plus by the HKEX.

For more on this story, go to https://hongkongbusiness.hk/

28 HONG KONG BUSINESS | Q4 2022 CEO INTERVIEW
Board directors with different life experiences look at problems and solutions differently
Board work is becoming increasingly onerous, both in terms of complexity and time required (Photo: David Hui, CEO, Heidrick and Struggles)

How virtual insurer Bowtie halves product prices

This is done by eliminating insurance agents from the onboarding process.

For Fred Ngan and Michael Chan, virtual insurer Bowtie’s co-founders and co-CEOs, Hong Kong’s insurance industry is outdated and expensive, apart from it being faced with a huge protection gap.

“With so many insurance companies in Hong Kong, it’s surprising that we are still facing a $6.9t protection gap. This means every working adult is facing a $1.9m protection gap,” Fred said.

Their solution to this pain point is to shorten the onboarding process and reduce its cost by removing from the equation intermediaries such as insurance agents. The processes of explaining to customers in detail the policies and benefits, applying their insurance for them, and assisting them with their claims usually take several days or even a week.

Agent-free platform

The company boasts that they do not need boots on the ground to do the selling of their products.

“It is a self-serve platform where [customers] can access all the products and pricing information. They get to be in control and design which product they want based on their own needs and research,” Fred said.

“The products that we offer have a very high value for money. Most of the products that we sell have the lowest premium in the markets. For example some of our medical products or term-life products we can save you 30%. Sometimes up to 50% compared to other products that are sold by an agent,” Fred explained.

This is because as an agent-free platform, they save on paying commissions to agents.

Fred believes they can do away with agents because Bowtie is very adamant about its transparency. The younger consumers, which is most of their client base, want to fully understand the terms of their policies before buying insurance.

“We’re very transparent with premiums. Customers can access all the information they need for their purchase decisions which is a very important element to building trust,” Fred explained.

Transparency, lowering premium pricing, and leveraging the digital boom are just some of the ways Bowtie has done to change the game in the insurance industry.

“Our process is automated. It is a lot more effective and efficient when we use technology to engage customers online,” Fred said.

Bowtie also uses modern ways to compensate for the lack of insurance agents when it comes to introducing their products to consumers. Fred said this is part of their way of building relationships with consumers.

“We have a blog that has almost two million organic traffic every month. We publish articles that teach consumers. For example, we have articles that explain what health

insurance is, how it works, and how to file claims. This is how we engage customers. This is how they get to know the brand and eventually come to our website and purchase a product,” Fred said.

SEA expansion

In its last funding round in 2021, Bowtie raised US$22.6m in a series B funding round.

The round was by Mitsui & Co., Ltd, with participation from existing investor Sun Life Hong Kong Limited. Fred said they are planning another funding to raise more capital but did not mention when it would be.

Right now Fred said they would focus on going beyond Hong Kong and entering other markets in Southeast Asia. Bowtie is eyeing Vietnam as one of the markets it identified that has much potential. Fred added that they are in the midst of doing research in some SEA markets.

“The fact that the business model worked in Hong Kong, we think we can replicate it. We have been launching some content marketing in different markets as a way to understand the customer demands in these markets,” Fred explained. They plan on working with Sun Life and Mitsui when they begin their expansion.

Fred said that with more and more accepting online insurance, he does not see this trend slowing down.

For more on this story, go to https://hongkongbusiness.hk/

HONG KONG BUSINESS | Q4 2022 29
The products that we offer have a very high value for money and the lowest premium in the markets
Even with so many insurance companies in Hong Kong, it is still facing a $6.9t protection gap (Photo: Fred Ngan, co-founder and co-CEO, Bowtie)
INTERVIEW

Why HK remains robust amidst energy crisis

Lantau Group expert says Hong Kong has secured energy from nuclear to gas-fired power.

Unlike the rest of the world, Hong Kong has a more secure and diverse energy supply, making it resilient to brownout threats and reducing exposure to the highest energy costs seen in many countries at this time. For example, the nuclear electricity supply from Daya Bay Nuclear Power Station is extended up until 2034. This can help Hong Kong keep up with the energy crisis, Mike Thomas, a founding partner at energy consultancy firm, The Lantau Group, told Hong Kong Business

Comparing Hong Kong to other markets, Thomas cited California, which has experienced difficulty meeting electricity demand due to massive heat waves in the state. European countries are also suffering from energy woes because they are reliant on imports, according to data analytics firm, GlobalData.

Thomas also talked about how Hong Kong could speed up its transition to renewable energy even as the market lacked solar and wind power.

In this exclusive interview, Thomas brings over 30 years of energy consulting experience to share his insights on why Hong Kong’s energy supply is faring better than other markets amidst rising costs.

Based on the fuel mix in Hong Kong, it is taking some nuclear power, which is not exposed to coal or gas markets. It is taking some natural gas, much of which comes from Turkmenistan via the 9000km West to East pipeline and some comes from local gas resources near Hainan Island which comes from Turkmenistan. It’s not the same as the LNG that Europe, Japan, and Singapore, are paying extraordinary premia for. This is long-term contracted, pipeline-supplied gas. That’s kind of a different dynamic. Then there is coal, which is also still part of the Hong Kong mix.

Hong Kong benefits right now from its very diverse energy mix compared to, say, Singapore, which relies on imported gas for over 98% of its electricity generation. Singapore does a great job of keeping the lights on, but the cost has been very high. Singapore is not in the same category of risk as Europe which has experienced the unexpected loss of gas supply from Russia and has a particular need for natural gas for both electricity and heating in the winter.

At the moment, Hong Kong really doesn’t have that same kind of issue or problem so that’s good. Let’s just recognise that that’s a product of all of the things that got us to this point, which is a reasonable regulatory regime, well-run power companies, decisions made back in the 1990s concerning contracting for supply from the Daya Bay nuclear power station, and the good fortune of a diversified fuel mix.

Can you expound on what makes Hong Kong’s energy more resilient than California’s?

At the time we are talking [on 7 September in California], it’s 103°F, which is pretty hot by any standard, almost 40 degrees Celsius. People have been concerned about whether the lights will stay on in Northern California. In fact, everyone is being asked to conserve as much as possible.

Compared to California, Hong Kong has a more robust system and reserve margin for meeting peak demand. Our exposure to such surprising heatwaves is probably lower because it is always hot in Hong Kong each year – whereas Northern California is normally much more temperate. Surprise is what challenges complex systems. The scope for surprise is what you have to plan for. No one likes energy surprises. We have to plan for the ‘expected surprises’ and hope to be able to avoid or find a way to manage through the ‘unexpected surprises’.

Recently, we’ve seen the same sort of a surprise in August when temperatures when the Mainland experienced its most extreme heatwave ever combined with drought. Hydropower availability was greatly reduced – much more than expected – leaving the system with a shortage. Businesses went without electricity. It’s always a problem when complex systems are pressed beyond what they have been planned to accommodate. It can be expensive, however, to plan a system to accommodate extreme outcomes. It’s a question of needing

30 HONG KONG BUSINESS | Q4 2022 INTERVIEW
Why is the Hong Kong energy sector in better shape than most global markets?
Hong Kong has a very diverse energy mix, taking some nuclear power and natural gas
What Hong Kong has in terms of electricity and infrastructure is a particularly good mix of
resources and
technologies (Photo: Mike Thomas, Founding Partner, The Lantau Group)

to be aware of what could go wrong and being willing to pay what it takes to be prepared for that kind of rare outcome.

With more extreme outcomes in fuel markets and in weather patterns, many systems in many countries will need to revise their planning factors, what kind of reserve margins are needed, and what kind of supply mix and technologies are most appropriate. Fortunately, Hong Kong has systems that are well-planned for the range of contingencies we are seeing right now. Tariffs must go up due to higher fuel costs, but lights, life, and business will go on.

Around the world, more generally, it almost seems that anything to do with temperature and water these days is a problem. The European problem is more tied to the sudden loss of Russian imported gas. But everywhere else, it’s been temperature and drought.

Why is Hong Kong better at mitigating rising energy costs and threats of brownouts? It’s the same issue as before, the diversity of fuels and technologies that Hong Kong has.

There’s a saying you go to war with the army you have. What Hong Kong has at this moment in terms of electricity and infrastructure. It just happens to be a particularly good mix of resources and technologies to deal with. It’s not a carbon-neutral energy mix – that is a future challenge. But it is a resilient and robust energy mix. We can at least enjoy the benefits right now of that.

Hong Kong is not dependent on hydrology and rainfall. Hong Kong is not as dependent on imported LNG. Hong Kong has different kinds of capacities that can be used, if one thing is not available, something else can be made available.

For the energy war that’s going on right now, so to speak, the Hong Kong army is well situated.

But in the energy transition, moving away from some of the coal that’s in Hong Kong, will still be a challenge that will push us more towards depending on natural gas. Then, moving away from natural gas to renewables will be more challenging because we don’t really have the obvious resource candidates to support that.

We don’t have vast tracts of solar or wind resources. It’s not clear what you can do with the offshore wind yet to scale or for Hong Kong so that challenge, we haven’t started facing quite yet.

CLP, one of the largest power firms in the Asia Pacific region, revealed that it is ramping up its natural gas as it prepares to phase out coal-fired generation in Hong Kong amidst carbon neutrality goals. It is also seeking to shift to renewable energy.

With these goals, do you think it would pose risks to Hong Kong’s resilience to mitigate rising costs?

I don’t think anybody has an absolute answer to that. Willingness to pay is always going to be important here. Singapore can keep the lights on, but it requires more costs right now. Physically, the Singaporean system is very resilient. Financially, it takes more money right now. Resilience needs to be thought of in terms of what it takes to keep the lights on as one part of the equation versus how to pay for it as the other part of the equation. There’s a balance between what has generally been called affordability or reasonable pricing, or acceptable tariffs, and the timing and of building new things to display solid tech.

If you’ve got a perfectly good functioning, existing,

generating unit that’s almost paid for, turning it off and replacing it with something that costs a lot of money will probably make your tariff go up. Hence the energy transition is a balance between willingness and ability to pay vs how fast you replace otherwise functional power generation assets with zero carbon alternatives.

What we’re thinking might start happening more now in many countries exposed to such volatile and high fossil fuel prices is that it will increase people’s appetite for renewable energy. Even if it’s a little bit higher in cost, but a lot more stable and predictable, people may start putting a premium on certainty and accelerate the reduction in reliance on fossil fuels, which are both volatile in price and sometimes there can be difficulties actually obtaining them within budgets.

This will be harder in Hong Kong but obviously easier across the border. The exchange of carbon credits may help. Longer-term power transmission may help. Nothing can or should change too quickly, but the wheels of change can be put in motion or even accelerated a bit.

Do you think Hong Kong is least attractive in driving energy-sector green foreign direct investments (FDI)? How can the city improve on this?

Hong Kong is attractive for foreign direct investments in the sense that the regulatory regime supports investment in projects agreed to meet the needs of Hong Kong. But what does this really mean?

To drive more FDI would require that Hong Kong find even more projects to do. Hong Kong is limited by size and resource base. Also, there is a question of timing and cost and need.

If you invest more today to stop using something you already have then, you may increase your price of electricity by more than if you waited and retired existing capacity resources as they aged. We could do that, but it isn’t a reason to track FDI. It’s more a consequence of accelerating zero carbon energy due to having a willingness to pay more for it. That’s just a different calculus. FDI is a consequence, but not a target or metric or lever here in Hong Kong.

It’s just better to not look at FDI. More FDI is not necessarily better if the FDI is going into things that are not needed yet or that would raise costs more than they are considered to be worth. It’s always better to look at the fundamentals and let Hong Kong’s openness to innovation and financial sophistication help after that.

HONG KONG BUSINESS | Q4 2022 31 INTERVIEW
Hong Kong is much happier paying a premium for certainty than to take the market swings
CLP is ramping up its natural gas as it prepares to phase out coal in Hong Kong (Photo: Black Point Power Station 1 by Minghong)

CASE STUDY: RETIREMENT INSURANCE

How Hong Kongers fare in their retirement preparations

Two out of five are hoping to retire before their 60s, Sun Life reveals.

Hong Kongers are becoming more active in futureproofing themselves, as Hong Kong’s Retirement Index score went up from 56.3 in 2021 to 61.1 in 2022. To further understand this behaviour, Sun Life conducted a study amongst its consumers to learn about their perceptions and motivations in planning for their retirement.

Sun Life Retirement Mastery Index evaluated 30- to 45-year-old Hong Kong consumers’ degree of control over retirement planning through their performance in three pillars: “Intelligence”, “Momentum”, and “Positive Experiences”.

“Intelligence” assesses the individuals’ information and knowledge of retirement planning and retirement savings; “Momentum” looks at concrete actions taken to plan and save for retirement; and “Positive Experiences” considers personal experiences on the retirement journey, Sun Life Hong Kong’s General Manager for Life and Health Christine Yeung explained to Hong Kong Business

Positive Experiences rises

The majority or 63% of the respondents have worked harder to plan for retirement in 2022 compared to the previous year at 52%. Meanwhile, 62% believe they have worked harder to implement their retirement savings plan, showing an increase of 11 percentage points compared to last year’s 51%,” Christine explained.

Amongst the three pillars, Hong Kongers are doing best in the “Positive Experiences” aspect (44%). In comparison, 43% of the respondents claim they are doing very well when it comes to “Momentum”, representing an increase compared to last year’s 34%. In addition, 50% are very satisfied with the frequency of their personal finance review, whilst 48% maintain a positive attitude towards the management of their retirement savings portfolio.

The “Intelligence” aspect is where most Hong Kong consumers underperformed, with only 40% saying they did well in this segment.

Macroeconomic factors

Despite the enhanced control over all aspects of retirement planning, Sun Life’s Christine warns against complacency given high inflation and an increasingly uncertain outlook.

“The current macroeconomic environment is posing a challenge for Hong Kongers,” especially in wealth planning. 74% of respondents feel they are less capable of accumulating wealth compared to two years ago, whilst 88% prefer to set a mid-term wealth management goal due to the unstable macro environment, which indicates local people are tending to be more cautious about wealth management over the last couple of years.

In increasing awareness about retirement insurance, Christine said it is important to have a clientoriented approach.

Sun Life does this by launching products and campaigns, like its Change Into a Happier You brand campaign where they motivate consumers to be more proactive about their future planning which involved a series of out-of-home advertising and TV commercials that garnered over 21.3m views.

Sun Life also enticed consumers by offering brand products such as granting the top 130 customers who pay the highest amount of accumulated Annualized First Year Premium from 1 July to 30 September 2022 a limited edition non-fungible token, which is a part of its recent launch NFT collection as part of Sun Life’s 130th anniversary.

“Over the past few years, the pandemic has gradually raised public awareness of risk management. People have become more proactive in monitoring their medical and retirement protection gaps, driving the demand for products that can act as comprehensive tools for wealth planning with a stable income to protect them from uncertainties in the future. Although Hong Kong people now have greater health awareness due to the pandemic, one should not underestimate potential medical expenses after retirement. We should all get into the habit of reviewing our retirement plans and progress regularly to help ourselves and our families be prepared for the future,” Christine said.

32 HONG KONG BUSINESS | Q4 2022
People are more proactive in monitoring their retirement protection gaps, driving demand for products that can protect them from uncertainties in the future
The current macroeconomic environment is posing a challenge for Hong Kongers
Christine Yeung

CASE STUDY: GREEN FABRIC

DBS Hong Kong shows off greener branch outfits

DBS Hong Kong’s new branch employee uniforms may be brown, but to them, it is a statement of how the future of its banking services is green.

Hong Kong customers will see local branch staff decked out in their new casual uniforms when they visit any of the bank’s Hong Kong branches every Friday and Saturday.

At first glance, the colour-blocked shirts may seem just like your typical shirts. But underneath the seams, the shirts represent everything that the bank wishes to represent: to be an environmentally friendly business with a more youthful yet professional look to appeal to the younger generation, according to Ajay Mathur, Head of consumer banking group and wealth management, DBS Bank Hong Kong. He added that the new outfits are an example of how the bank embeds environmentally friendly elements and sustainability in every aspect of its business practices.

“Customers may feel more relaxed seeing our colleagues in this casual uniform at our branches, knowing that the weekend is coming,” Mathur told Hong Kong Business.

“Such wardrobe refresh builds on our image as a forward-looking bank of the future, presenting our brand value proposition as encapsulated by the “Live more, Bank less” ethos,” Mathur added.

Green fabric

The polo shirts feature a colourblocking of the bank’s official colours, deep carmine and black at the collar and sleeves. For the bodice, DBS chose a comfortable brown shade that is easy on the eyes of the customers. The most notable feature of the shirts, however, is not their colour scheme but the fabric used.

The polo shirts are made from a sustainable fibre mix of organic cotton and recycled polyester. According to Mathur, cotton was grown and processed without pesticides and other harmful

one of its oldest office buildings to transform it into the Lion City’s first net-zero development by a bank. This means that the bank has an office building that can count itself as one of the more or less just 500 net-zero commercial buildings worldwide.

chemicals and utilises plastic bottles.

The practice began even before the new casual shirts came to life. Since 2020, DBS Hong Kong staff’s branch suits have also been made from fabric making use of 65% recycled polyester and 35% polyester blend, Mathur explained.

It may seem like a small deal given the financial transactions involved in running a bank. But Mathur pointed out that the new uniforms are part of its branding.

“We see this wardrobe refresh as an important initiative, not only portraying a young and energetic image of our frontline employees but also demonstrating the bank’s commitment to driving positive environmental impact to our community,” Mathur said.

Net-zero office

This is not the first time that DBS overhauled the non-financial aspect of its operations to make them more environmentally sustainable. Earlier in July, its Singapore arm unveiled the DBS Newton Green building. The project saw DBS retrofitting

Before retrofitting works began, the old building consumed about 845,000 kWh each year, equivalent to the annual energy consumption of about 200 four-room HDB homes in Singapore. To equal that energy, the bank has lined the building’s rooftop with solar panels, powering the operations of 400 employees that work within its walls.

The bank has also outfitted its other offices and locations with solar panels in order to reduce the consumption of non-sustainable energy.

“[This] is an important step forward in understanding how net-zero technologies can be scaled up to not only move DBS closer towards its netzero objectives, but to also help other organisations green their operations as we collectively realise a more sustainable future for Singapore,” DBS said regarding its net-zero office.

“It is our belief that a different kind of bank is needed in a postpandemic world – one that is more sustainability-focused As we work towards becoming the Best Bank for a Better World, we will continue to up the ante on addressing sustainability issues and devoting to be a purposedriven bank,” Mathur concluded.

HONG KONG BUSINESS | Q4 2022 33
The polyester used is partly made from recycled plastic bottles
The bank is making a statement about the future not through a new product, but with its uniforms.
Such wardrobe refresh builds on our image as a forwardlooking bank of the future
Ajay Mathur

Property market ends downcycle

Real estate experts said that the market will have a reset by 2023.

Real estate investors may have shunned Hong Kong in the past two years, but experts’ 2023 outlook—particularly for the industrial and retail sectors—may entice them to reconsider the city as a property investment destination. The property market is poised to end its down-cycle in 2022 and enter 2023 with hopes of normalisation.

“With the gradual easing of the social distancing and travel restrictions, we would expect to see a moderate recovery across all the sectors with momentum gathering pace starting in the last quarter of this year,” Dorothy Chow, Colliers’ Executive Director of Valuation & Advisory Services for Asia, told Hong Kong Business.

Investors’ eyes on industrial Amongst sectors, Chow said the industrial sector will remain the most attractive to investors come next year.

“High yield assets have become the focus of the investors nowadays, and these would include industrial properties, logistic, and alternative assets,” said Chow.

“We expect the industrial market to have an increase in the rental and the capital levels next year,” the Colliers expert added.

Chow said industrial assets are popular amongst inventors because they fetch yields of 3% to 5% compared with typical offices or commercial units, which fetch less than 3% yield.

To add, Cathie Chung,

Director of Research

JLL in Hong Kong, said prices of industrial assets are relatively and comparatively “on the lower side.”

These factors are also what made the industrial sector the bestperforming segment for 2022, said Chow and Chung.

Chow said transaction volumes for industrial assets doubled in the second quarter, compared with the first quarter and on a year-on-year basis. In the same period, industrial investment volume also increased by 37%, according to Chow.

“In terms of leasing and sale activities, industrial is the most active sector. Tenants are bringing demand for warehouses, and

COVER STORY 34 HONG KONG BUSINESS | Q4 2022
High yield assets have become the focus of the investors Senior at
In terms of leasing and sale activities, industrial is the most active sector

investors are looking for value-added opportunities,” said Chung.

“When investors acquire industrial properties, they convert them to a data centre or cold storage, or self-storage which also has good demand. There are repurposing opportunities for industrial properties,” she added.

Retail remains resilient Like industrial, the retail segment showed some resilience during 2022, according to property experts.

According to Chung, the segment was supported by domestic consumption and government stimulus packages, amidst the lack of foreign visitors.

“All of us have sort of retained our expenses within the city. Therefore, the neighbourhood and discretionary retail became relatively stable,” Chung said.

Operators of food and beverage (F&B) establishments likewise took advantage of the lower rents during the pandemic and expanded, JLL’s Chung added.

“We believe that the market is stabilised resilient and retailers are interested to come back when the market opportunities open come back, especially when the borders fully reopen and rents become more affordable,” JLL’s Chung said.

Chow echoed this but underscored that rising interest rates are also a worry for the market, which is why she expects the retail segment—both in terms of rental

and property price—to either be stable or have a very mild increase in the next six months.

‘Flight to quality’ lifts office market

With many real estate buyers hopping into a “flight-to-quality,” Chung and Chow said the office market was able to steer clear of any turbulence and remained stable in the first half of the year.

“The sector was driven by demand for premium office space as tenants are fighting for better quality and more flexible office workspace for their workers,” Chung said.

Chow explained that flight-toquality means tenants are likely to pay “slightly more” for more highquality premises.

Since premium offices are located in Central, the submarket might see some moderate growth in rentals moving forward.

“Many of the tenants who were occupying spaces in non-core areas are looking at new locations or new premises in Central. We see that trend in 2022 and we still expect that trend will continue in 2023,” Chow commented, adding that the “flightto-quality” behaviour from tenants will also remain to be the key theme in the office market next year.

Prudently positive

With challenges like rising interest rates likely to remain in 2023, Chow said she is “prudently positive” about the market’s outlook.

Chow said the opening of the

border will help the market gain a bit of recovery or an increase in transaction activities in most of the sectors in 2023.

Chung echoed this, adding that if there will be no “moving backwards in social distancing and border control measures,” 2023 will really be the year of normalisation and resetting for the commercial property market.

A worse

year

for residential Unlike the commercial sector, Chung the residential market will face another round of price correction in 2023, due to weak domestic economic growth, population shrinkage, interest rate hikes and poor stock market performance.

In 2022, the residential sector also had the worst performance out of all sectors, said Chung.

Chow said the market slowed down mainly due to unexpected events at the beginning of the year, particularly, the lockdown in China.

“Buyers from the Mainland have been quite limited nowadays, in the second quarter, we still see a lot of local buyers buying into residential projects as long as the pricing has been reduced,” said Chow.

“We actually see developers reducing the asking price of the firsthand projects in Hong Kong, and that has been receiving good response,” added Chow.

COVER STORY HONG KONG BUSINESS | Q4 2022 35
The industrial market is expected to have an increase in rental and capital levels next year Dorothy Chow Cathie Chung The sector was driven by demand for premium office space
36 HONG KONG BUSINESS | Q4 2022
Life insurance is a people’s business. Our job is to give people a piece of paper with a promise written on it
Damien
Green Chief Executive Officer, Manulife Asia

Former Manulife Hong Kong CEO is now one of Asia’s top industry executives

Damien Green recently took the helm of Manulife Asia as its new chief.

Damien Green never planned to hold a high position, let alone have a career, in the insurance industry. He first started working in an Australian superannuation fund, improving and enhancing his clients’ retirement savings. There he learned a great deal about the importance of insurance, particularly insurance for mortality and morbidity.

Now, he is the CEO of Manulife Asia, after being promoted in 2022 from being the CEO of Manulife Hong Kong.

In an exclusive interview, Hong Kong Business got to know more about Damien and his experiences as an insurance leader in Hong Kong, his thoughts on the issues in the industry, and how he plans to lead Manulife Asia to become the number one pan-Asian life insurance company.

Can you tell us the most interesting thing about the insurance industry in Asia?

What I’ve come to learn was that the Asian life insurance industry is extremely exciting. It’s a balance of mature and high-growth markets with powerful distribution. It’s really motivating to participate in a key financial services segment in the Asian region.

Life insurance is a people’s business. Our job is to give people a piece of paper with a promise written on it. From our advisors, agents, and the people on the frontline— everybody’s passionate about our purpose, which is to make long-term promises and to keep those promises by ensuring we’ve got the right solutions for people that resonate with their inner need to protect their income.

We are also giving back to the communities we operate in. For example, in Hong Kong, we launched our Manulife Health Resilience Program for the Elderly with Christian Family Service Centre. It aims to provide 1,000 online medical consultations for needy seniors in the Kwun Tong and Wong Tai Sin districts, with end-to-end support to help them rebuild their health from home. The program includes online consultations with Chinese and western medical practitioners and the delivery of medicine.

Can you share with us the things that you learned as you worked with the top firms in the industry?

I could just sum it up into one. Culture wins. If I look at the difference between major life insurers today, the products are generally the same. They’re all very competitive. What differentiates everything is culture. We’re focused on supporting and energising our people by breaking down the hierarchy and making sure that people are comfortable with who they are. We are also constantly driving diversity in Manulife, including through our Employee Resources Groups (ERG) in Asia. They play a critical role in the development and implementation of our diversity, equity and inclusion or DEI Strategy. Globally, we have 13 ERGs, with 31 chapters and over 13,000 members.

Our ERGs give us line-of-sight to diversity, equity, and inclusion issues that are top of mind for our employees as well as help us identify opportunities where we can play a stronger role, and let us hold ourselves accountable to our strategy and commitments.

What do you think are the top issues in the industry insurers should prioritise?

The most important is that the industry moves to have a post-pandemic mindset. In Manulife, we are now looking to significantly accelerate growth, invest heavily, and focus on opportunities before us like the large protection gap in Asia. According to Swiss Re’s research, Asia Pacific expects a US $119t mortality protection gap in 2030. To give you a sense of how much that will grow, back in 2019, it was first calculated at US$77t. But what’s driving the gap? It’s the rising middleclass. Right now we are expecting the middle class in Asia to grow from 2 billion people in 2020 to about 3.5 billion in 2030, that’s a 73% increase.

Because standards of living are higher and incomes are higher, the cost associated with the loss of a primary source of income through an untimely event like death is much higher.

Tell us about your days as Manulife Hong Kong’s CEO. What are the key achievements you are most proud of? Manulife Hong Kong and Macau is celebrating its 125 years in the insurance business and it’s the longest continuously operating life insurer in Hong Kong. What I’m proudest of in terms of what Manulife Hong Kong has achieved is record agency growth. We now have over 11,000 agents, with a high single-digit growth rate since the beginning of the pandemic whereas the market is going backwards, with the number of agents declining in our key competitors.

This was achieved through agency engagement programs such as the CEO program for our young agents, aimed at bringing in potential high-performing agents from other industries. The other thing I’m proud of is our high record insurance sales. We have exceeded the pre-pandemic levels of 2019, with new business value reaching $910m (US$115.93m) and an annual premium equivalent at $1.31b (US$170m). We’ve done that by creating great products and outstanding partnerships like our exclusive partnership with DBS in Hong Kong.

With you at the helm of Manulife Asia, can you share with us your goals for the company?

We’ll be aiming to be the number one pan-Asian Life Insurance Company. Currently, we’re top three and we are the strongest growing of the three. In Asia, we’re present in 13 markets with 13 million customers and over 100,000 agents. We have 100 bancassurance partnerships, with 10 exclusive partnerships with the 16-year partnership with DBS as the jewel in the crown.

HONG KONG BUSINESS | Q4 2022 37 CEO INTERVIEW

INTERVIEW

What YAS MicroInsurance’s vision of an ondemand insurance product looks like

Its latest offering, RYUN, allows runners to be insured per kilometre, on the spot.

a running data log which can then be used to share and compare with friends.

RYUN covers up to $5k in medical expenses, $2k cover for damage to personal belongings, and $2k cover for heatstroke or burglary.

RYUN is currently available only in Hong Kong and Malaysia. The product is underwritten by Generali in Hong Kong and Etiqa in Malaysia.

Too much focus on life insurance

Andy and YAS MicroInsurance created these on-demand insurance products because of the belief that Hong Kong’s insurance industry is far too focused on life insurance or long-term life insurance.

It was a year-and-a-half ago when YAS MicroInsurance Co-founder and CEO Andy Ann went on a hike in Hong Kong and came home with an idea for an on-demand insurance product that you can turn on and off without committing to paying for premiums for years.

“I was in the mountains around three or four in the afternoon. I was going downhill when I suddenly had a scary thought about whether I will be able to make it [down] on time. Then I thought to myself, what if I can purchase insurance on-demand? I click a button and now I’m insured and when I reach my destination, I click another button when I don’t need insurance anymore,” Andy explained in a quick chat with Hong Kong Business

That idea blossomed into the first on-demand insurance product YAS MicroInsurance created called HYKE, which is an insurance for hikers. This was then followed by BYKE, another on-demand insurance product for professional bikers.

In 2022, YAS MicroInsurance introduced its third product made specifically for runners.

Insurance for runners

The concept of RYUN is simple. A runner buys insurance by the kilometeres, starting at $50 for 500 kilometres. RYUN provides insurance coverage for accidents and medical expenses.

“We believe that insurance should be as simple as Spotify or Deliveroo. You press a button, and you are insured,” Andy explained.

Unlike most insurance, where you have to talk to an agent and pay premiums on a monthly basis, RYUN insures with a simple tap of a button. A customer will only have to download the YAS app and register. Once all the details have been inputed, all they have to do is tap RYUN and start running. The insurance starts and ends after each run.

For each run, the minimum deduction is 5km from the 500-kilometre insurance. This means that until all 500 kilometres are used up, the runner is still insured and he also has the option to turn it off whenever he finishes his lap.

The app tracks runners via GPS. It also monitors the weather and updates the runner as he or she goes. The app has several social features like a photo sharing option and

believe that insurance should be as simple as Spotify or Deliveroo. You press a button and you are insured

“The reason why we want to jump in is that we think that we don’t need much of agents and brokers to take care of general insurance. First of all, the margin (commission) is really low. If [agents] are able to sell life insurance the commission is higher unlike when selling travel insurance. They don’t really have the interest to sell [general insurance],” Andy explained.

Because most general insurance products do not require agents or brokers, this makes the services of a digital insurer like YAS MicroInsurance cheaper.

“It is easier for customers to process their claims faster and much more efficient than before. In about 48 hours you can file a claim and you don’t need to wait three months for this to process,” Andy said.

More on-demand products

Andy said YAS MicroInsurance will focus on more ondemand products. One of the products they are working on is what they call WALKY, an insurance product for people walking their dogs.

“With WALKY, you will pay premiums each time you walk your dog. Coverage would range from medical expenses if the dog accidentally bit someone or insurance for when it runs away,” Andy explained. The plan for the release of WALKY will be around September 2022.

YAS MicroInsurance is also working on expanding microinsurance offerings to other activities like swimming, tennis, volleyball, and soccer.

With this kind of approach to creating new, tailored insurance products, it would not be surprising to see insurance evolve into an ondemand-based model.

38 HONG KONG BUSINESS | Q4 2022
We
Andy Ann, CEO, YAS MicroInsurance
HONG KONG BUSINESS | Q4 2022 39

Oscar Chow, 35, Savills

Hong Kong

Oscar Chow is the youngest senior director in Savills Hong Kong. Now a chartered surveyor, he has completed multiple landmark deals by advising ultra-high-net-worth individuals, conglomerates, industrialists and private equity funds on the acquisition and disposal of a range of industrial properties in Hong Kong. He is widely regarded in the sector for his impressive track record and industry knowledge.

He won the prestigious “Best Deal of the Year” award at RICS Awards Hong Kong 2021. He also won the title of “Savills Best Agent of the Year 2020” on the basis of the same transaction.

Maverick Law, 35, JLL Hong Kong

Maverick Law is a Director at JLL Hong Kong since 2018. With his 12 years of experience in the industry, he has led over 400 transactions and is key in driving some of the city’s landmark transactions. Law has also been a key advocate in promoting technological innovations in real estate.

Charli Chan, 36, Cushman & Wakefield

Charli Chan serves as the Executive Director and Head of Hong Kong PRC Team, Capital Markets in Cushman & Wakefield. She is a results-driven professional that has over 10 years of experience. She has also provided disposition and acquisition advisory for commercial office, retail, logistics projects and portfolios in Hong Kong, with a transaction track record valued at RMB60b.

Tommy Chan, 36, Savills Hong Kong

Tommy Chan is one of Savillsy’s youngest Senior Directors, joining the company in 2007. Having over 15 years of real estate experience in the city, he specialises in the acquisition and disposal of whole block buildings and development sites. Despite the pandemic, he has closed deals on various projects worth over $2.44b.

His notable achievements include the acquisition of the headquarters in Fanling in 2021 on behalf of Hong Kong Housing Society, and acquiring the site at 89 to 93 Tai Hang Road in a highly complex case involving a Civil Servant’s Co-operative Building Society (CBS) development on behalf of SEA Group.

David Wood, 36, CBRE Hong Kong

David Wood is an executive director in CBRE’s market-leading office leasing team, overseeing a specialist team of highly experienced professionals. He has over 15 years of experience in real estate where he has transacted approximately four million sq. ft. of commercial space. His broader experience includes valuation and consultancy work, covering land use advisory, single asset/portfolio valuations, amongst others.

Clayton Evans, 37, Cushman & Wakefield

Clayton Evans is Cushman & Wakefield’s Executive Director for Office Services, where he is responsible for mentoring junior and mid-level brokers, in addition to winning and retaining leasing mandates. He advises corporate occupiers on renewal, relocation and rent review negotiations. Clayton has been a regular recipient at Cushman & Wakefield’s annual awards of excellence for recognition of his revenue production.

39, Savills Hong Kong

Jay Fan is one of the top-performing senior directors in Savills Hong Kong. He has completed 51 deals that totalled $14b in consideration since joining the company in 2011. His expertise is in the disposal of various assets spanning offices, shops, residential buildings, and sites.

Some of his accomplishments are the disposal of the top 3 floors with naming rights of 888 LCKR, a redeveloped office building that worth $1.188b, and an en-bloc commercial building at 69 Jervois Street with consideration of $1.8b.

Flo Geiser, 39, OKAY.com

Flo Geiser has been with OKAY.com for seven years, wherein she has achieved significant growth. In 2021, she won five sole agencies and represented sellers of luxury homes with a value of over $20m each. Geiser also often liaises between agents and senior management, and shares insights that enrice

Tommy Kwan, 39, OKAY.com

Tommy Kwan joined OKAY.com and the real estate profession in 2019, after spending 13 years in Finance. The skills he brought with him helped catapult him to the top. With a focus on luxury properties, the majority of his sales transactions each have a value of over $25m. He has won and represented 10 sole agencies to date.

Reeves Yan, 39, CBRE HK

Reeves Yan is CBRE Hong Kong’s Head of Capital Markets, where he leads a team of 30 elite consultants in delivering world-class investment solutions to clients. With over 17 years of solid experience, he is one of the top deal makers in the industry. Yan delivers a high standard of professional services with his well-proven track record and valuable experience.

HONG KONG BUSINESS | Q4 2022 41
8 9 10 11 17 12 13 14 16 15
REAL ESTATE LUMINARIES

REAL ESTATE

Where to invest your millions in Hong Kong real estate

Realtors cited two property types that can offer higher upside potential in return.

assets, warehouses and cold storage demand has increased significantly due to the growing popularity of online purchases,” Yan said.

“High quality industrial assets have been the priority purchase options by institutional investors in the last 12 to 18 months,” he added.

In terms of location, Yan said it’s best to invest in industrial assets located in such as Kwai Chung, Tuen Mun and Yuen Long since these areas are “supported by infrastructures.”

Cushman & Wakefield’s Head of Hong Kong PRC Team, Capital Markets, Charli Chan said investors must also look into the first- and second-tier cities in East China and the Greater Bay Area (GBA) when planning to invest in logistics or warehouses or other new economy assets such as industrial parks and data centres.

“East China is a mature industrial logistics market, whilst the GBA offers an increasingly comprehensive transportation network. Both areas present a range of investment opportunities,” Chan said.

Investors keen on putting their money into Hong Kong real estate must keep a particular eye on hotels because regardless of whether the border to the Mainland reopens sooner or later, they will still gain from the asset class.

Since hotels can be transformed into long-stay apartments or co-living spaces, it can benefit from strong local demand for rental accommodation.

The rental yield of hotels turned apartments or co-living spaces could reach 3% to 4%, according to Oscar Chan, Head of Capital Markets at JLL in Hong Kong.

If borders open, Chan said owners can resume the operation of their hotels and can even achieve a rental yield between 5% to 6%.

Since the asking prices of hotels are still at a low level, Chan said it will be good to invest in the asset class now.

“With the anticipated border opening to international travellers, hotel rates and occupancy are expected to see a decent rebound in the next six months,” Reeves Yan, Head of Capital Markets at CBRE Hong Kong, commented.

Apart from hotels, retail properties also offer higher investment yield and have higher upside potential in return. According to Chan, retail

properties in the neighbourhood area offer a rental yield of 4%.

“The local demand in the retail market in these areas remains strong,” JLL’s Chan said.

Yan said Central, Causeway Bay, Tsim Sha Tsui and Mongkok are also good locations for those who want to invest in commercial assets like retail and office since these traditional core locations have the “strongest recovery potential when the economy gains its momentum back.”

OKAY.com’s Tommy Kwan said Central will also become the heart of the city again once the economy improves and ex-pats eventually return to Hong Kong.

“There will be demand again from workers wanting to live close to work. It is always a safe bet to invest in midlevels,” he said.

Most sought-after asset class

Whilst hotels are gaining popularity amongst inventors, Yan said the industrial escort remains the most sought-after asset class to invest in given its extremely low vacancy rate and tight supply.

In the next 12 months, industrial rent and value are expected to see another 5% to 10% growth.

“During the pandemic, logistic

Kennedy Town is King

Whether investors are looking to invest in commercial or leisure properties, Kwan said the best location would be Kennedy Town given the abundance of future projects in the area.

Kwan said there will be new hotels, shopping malls, and luxury apartments to be built near the beginning of Victoria Road which connects Kennedy Town to Wah Fu.

“With the existing MTR and public transport network, it will certainly transform the area in near future,” Kwan said. Kennedy Town is a sevenminute MTR ride from Central.

The government’s plan to put more greenery and leisure areas along the harbour also makes Kennedy Town more attractive, according to Kwan.

“All these improvements will attract more people to live or spend time or money in the area, which will then help bring up the properties’ prices in the near future,” he said.

Kwan also mentioned that Kennedy Town will be “the connecting point” of the city’s artificial islands in Lantau and Hong Kong Island.

For more on this story, go to https:// hongkongbusiness.hk/

42 HONG KONG BUSINESS | Q4 2022
Whether investors are looking to invest in commercial or leisure properties, the best location would be Kennedy Town (Photo courtesy of Getty Images) Oscar Chan Reeves Yan Tommy Kwan

Addressing ESG investment gap with data

Wielding data the right way is key to pushing and meeting ESG goals.

Whilst data holds the power to make more informed ESG-related decisions, there is a gap between what companies need versus what data they currently have.

“A few years ago, we didn’t have enough data available to support ESG investing. Whilst there is much more data now, it’s fragmented across different sources, including company reports, news articles, data vendors, and rating agencies,” Sisca Margaretta, Chief Marketing Officer, EMEA & APAC at Experian, told Hong Kong Business in an interview.

In a separate study, professional services firm EY also found that 46% of asset managers and 25% of banks find the lack of real-time ESG data to be limiting.

The lack of standardised, defined benchmarks means much of the ESG data companies are providing right now is not useful enough to support investment decisions, she added.

“Beyond problems like inadequate disclosure and data availability, a lot of companies today also adopt practices like ‘greenwashing’ – which refers to using marketing tactics to over-amplify their ESG efforts – to gain favour from stakeholders,” Margaretta warned.

In a survey of 6,000 bank customers globally, cloud platform provider Mambu found that over 67% of respondents believe that their banks are guilty of greenwashing: that is, they believe that their banks are overstating their sustainable-related efforts. In financial hub Singapore, that’s 68% of respondents.

This is where a system of checks and balances becomes essential to make sure that any and all ESG data is honest and reliable, according to Margaretta.

Sharing the right information is also key to ensuring that consumers are aware of banks’ ESG.

Raising investments

Beyond beating away reputational risks and meeting the increasing sustainability mandates of both regulatory bodies and the public, the right use of data can also push up investment activities in the ESG space.

“When reliable and adequate data is made available, investments tend to rise. Given that over 90% of the world’s data has been created in the last five years, we have ample information to drive fund allocation towards sustainable causes – provided we choose and interpret it efficiently,” Margaretta said.

Margaretta noted the growing awareness around ESG investing over the last few years, which in turn made it a central concern for the financial sector. A chief player to this push are the younger generation of investors, who were noted to be “passionate about addressing systemic concerns like climate change and social inequalities.”

“As this cohort moves up the corporate ladder, they have

more assets at their disposal to address these issues through responsible investment,” she added.

Another factor is increased global awareness for action towards environmental preservation, culminating with the UN Climate Change Conference (COP26) held late 2021, which further brought this issue to the forefront for both governments and private players.

These factors are collectively enabling massive growth in both the volume and diversity of ESG investing, and it is now estimated that ESG assets will account for a third of the projected total assets under management globally, surpassing $41t by the end of 2022 and $50t by 2025, according to Margaretta.

All these makes data all the more a necessary feature of winning in, and thriving, at the sustainable finance space.

Margaretta added that tools like artificial intelligence (AI) and machine learning can address challenges, “by developing models to make sense of varied data sources.”

“They can also go a step further by integrating different datasets into a comprehensive view – eliminating the bulk of noise, whilst retaining the information that truly matters,” she added.

“Analysing and processing ESG data is a relatively new and evolving concept. The industry needs to remain agile in order to continue adapting to developments in the landscape,” Margaretta concluded.

HONG KONG BUSINESS | Q4 2022 43
We have ample information to drive fund allocation towards sustainable causes if we interpret it efficiently
Whilst there is much more data now, it’s fragmented across different sources (Photo: Sisca Margaretta, Chief Marketing Officer, Experian)
INTERVIEW

ANALYSIS: REAL ESTATE

Why Mainland’s border reopening will be crucial for the luxury market in 2023

Higher sales and demand are on the line, says property expert.

Buyers from the Mainland have been dubbed as the “major purchasing power” supporting Hong Kong’s luxury market, which is why a possible reopening of borders between the two locations bears good news for the property segment.

Jordan Miller, Managing Director of real estate agency OKAY.com, told Hong Kong Business that a free flow of travel or movement between Hong Kong and China will “create a strong catalyst for buyer interest from China to resume to pre-COVID levels, which in turn may result in higher sales interest, demand, sales volume, and price appreciation.”

In the second quarter (Q2), luxury apartment rents on Hong Kong Island, Kowloon, and the New Territories rose by 1.0%, 2.5%, and 0.5%, respectively. According to Savills, the increase in Q2 was mainly driven by professionals and wealthier families from the Mainland who were allowed to travel to Hong Kong without compulsory quarantine due to travel schemes such as Come2hk and Return2hk.

Miller added that demand from the Mainland, alongside a finite supply, helped the market to be at a “fundamentally sound” state thus far in 2022. Luxury rental and sales prices

were down 3% and 4% respectively YTD through August 2022, modest relative to declines in other regional and global asset classes.

“If COVID guidelines ease further in both Hong Kong and China by year-end, we anticipate an uptick in business sentiment, economic activity and, by extension, buyer interest in luxury homes,” Miller said.

In addition to border reopening, Miller said any lowering of the stamp duty that foreigners must pay on Hong Kong properties can be of greater support to the luxury market. Currently, the stamp duty is at 30%.

Beyond border reopening Miller, however, underscored that the luxury market was also hit hard by global headwinds in 2022.

“A rising interest rate environment, inflation, and economic slowdowns led to significantly fewer sales transactions in Hong Kong’s luxury residential market,” said Miller.

“The city-wide COVID outbreak in March, the Hang Seng Index down 28% year-to-date, and uncertainty on whether macroeconomic risks are transitory or structurally persistent in a rapidly rising interest rate environment kept buyer interest at bay,” he added.

Data from Savills showed that in the first quarter, luxury volume dropped to 91, its lowest since the outbreak of COVID-19 in the third quarter of 2019.

Whilst these remain a concern, Miller reiterated that improvements in Hong Kong’s quarantine measures, which allow far more seamless entry into Hong Kong, is a constructive step towards reopening Hong Kong’s borders and capital flows.

“The recent lowering of hotel quarantine guidelines to ‘zero +3 days’ is a strong market signal that the government is moving towards an accommodative stance to reopening Hong Kong to international business, which will be a net positive for the overall Hong Kong business community,” he said.

“A rebound in business sentiment and activity will be supportive of luxury sales. Bigger picture, we see mainland China investors increasingly active in the Hong Kong property market as Hong Kong’s economy becomes more interconnected to China through the Greater Bay Area initiative” he added.

2023 expectations

Apart from higher sales volume, Miller said he also expects price trends in the luxury market to range between flat to modestly up in 2023.

“The base case for prices to hold steady is predicated on limited supply and macroeconomic forces that are supportive to this asset class in the medium-to-long term. Prices holding steady year-to-date against the backdrop of so many local and global uncertainties serve as an indicator of this price support,” he said.

Meanwhile, across sub-markets in the luxury sector, Miller said the Peak and Mid-Levels Central could gather interest from buyers.

“In these districts, discerning buyers can gain exposure to the most sought after / convenient locations within Hong Kong Island, in addition to owning larger-sized properties that are rare commodities in Hong Kong.”

44 HONG KONG BUSINESS | Q4 2022
A rebound in business sentiment and activity
will be
supportive of luxury sales
We anticipate an uptick in business sentiment, economic activity, and buyer interest in luxury homes
Jordan Miller

WILLIAM KN CHAN

Hong Kong insurers’ response to sustainability challenges

Rarely do we see so many different parties, public and private, crossing geographical, political and social boundaries to work in unison for a common objective. A broadening of the understanding of the dire consequences of inaction and a strong sense of time urgency have fuelled the now unstoppable momentum behind the global drive for green and adjust.

However, the effort to embrace and promote sustainability is not without challenges. Whilst many of such challenges are common across countries and sectors and require coordinated global solutions, some are specific to the region or industry and require local or industry-specific solutions. Insurers in Asia face both types of challenges in progressing their sustainability initiatives.

The HKFI (Hong Kong Federation of Insurers) has conducted a “Green Insurance Survey” amongst its members in 2021. The findings highlighted a number of barriers facing insurers in Hong Kong as they pursue green insurance objectives, including: (1) a lack of harmonised market standards and definitions. (2) a lack of policy framework for green insurance product development; and (3) limited knowledge and expertise on green insurance.

Without harmonised market standards, especially reporting and disclosure standards, companies have uncertainty on what to aim for and prioritise. The latest focus is on the consultation by the ISSB (International Sustainability Standards Board), which was created by the IFRS (International Financial Reporting Standard) Foundation Trustees with a mission to deliver a comprehensive global baseline of sustainability and climate-related disclosure standards. The emphasis is on enabling the production of globally comparable sustainability information. It seeks to build upon the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and incorporate industry-based disclosure requirements derived from Sustainable Accounting Standard Board (SASB) Standards. Insurers, along with other financial service providers, have been invited to participate in the ISSB’s 120day consultation exercise, closing on 29 July 2022.

One key challenge facing the development and implementation of globally harmonised standards is the data and resources requirement by financial service providers in order to produce reports consistent with proposed standards. Proactive engagement by the industry in the consultation would help the standard-setting bodies to strike a good balance between comprehensiveness and a practical implementation timeline.

Developing

effective green insurance policies

Whilst insurers may have aspired to provide green insurance products in response to the growing ESG consciousness and demand of their customers, the enthusiasm has been held back by a lack of a clear policy framework on green insurance products. Recent reports about large corporates being charged with “greenwashing” further added to the hesitation in view of the uncertainties on what qualifies as a “green insurance product”. Developing an effective policy framework on this

requires close coordination between the regulator and the industry.

The HKFI has established a Task Force on Green Insurance, drawing in subject matter experts from the industry. Several sub-groups have been formed to look into a couple of dimensions including guidelines /benchmarks for disclosure, fostering a culture of green and ESG, and green product development (one for Life Insurance and another on General Insurance). Regular meetings with the HK Insurance Authority have been held to discuss proposals and deliverables.

The UNEF FI Principles of Sustainable Insurance (PSI) have just published their first ever ESG underwriting Guide for the Life & Health industry. The guide reflects the critical role of underwriting risk in facilitating a more sustainable future for clients, business partners and communities. Insurance companies are encouraged to review the guide and consider how this can support their business when evaluating the potential impact of ESG risks on Life & Health underwriting.

The “talent gap” challenge is not specific to the insurance industry. As more and more financial sector companies signed up for climate and sustainability covenants and alliances, they have an increase in demand for talents with ESG expertise to help them to make preparation and take the steps required to meet their pledged targets.

To address this gap, a Capacity Building Working Group has been established by the HK Centre for Green and Sustainable Finance (GSF), led by the HKMA (HK Monetary Authority) and supported by representatives from a broad segment of the financial industry, including insurers, banks, asset managers and leading universities. Adopting the recommendation from the working group, the HK Government Financial Secretary has announced, in its 2022-23 Budget Speech, a three-year “Pilot Green and Sustainable Finance Capacity Building Support Scheme”. Under the scheme, subsidies will be provided for the training and acquisition of relevant professional qualifications. Other initiatives including a central online open-access repository for relevant training courses and qualifications are in progress.

In all, the insurance industry, in conjunction with other key players in the financial sector and the regulators, has taken proactive steps to overcome the challenges they face in sustainability. As a major part of the global financial industry and the owner of a very sizeable pool of investment assets, insurers are well-positioned to make significant contributions to green and sustainability goals over time.

46 HONG KONG BUSINESS | Q4 2022
WILLIAM KN CHAN Chief Investment Officer, HSBC Life (HK)
OPINION

DIREACH was founded in Hong Kong in 2020 with the core value of “Premium Product. Premium Brand.” The brand specialises in mobile digital product accessories, including audio accessories, power banks, chargers, charging cables and UV disinfection boxes.

DIREACH has been awarded the “e-brand awards” by e-zone in 2020 and 2021; the “Most Innovative Enterprise Award 2020” by Business Innovator, the Asian business creative content platform; and “The Excellence Brand Award 2021” by PCCW and Yellow Pages.

DIREACH_HK
iPhone 13/ Pro/ Pro Max Protective Case 65W GaN USB Charger UVC LED Sterilizer Box with Wireless Charging Superlative Anti-Bacterial Cable Elite Go 21T True Wireless Earphones

LAWRENCE CHIA

How your business can get the most out of the metaverse

From the MTR’s launch of a ‘Web3’ (an internet service using decentralised blockchains) metaverse partnership with The Sandbox platform to K11 MUSEA’s METAVISION NFT showcase on HSBC’s Main Building façade back in June 2022, signs of metaverse are proliferating in our lives, and proliferating fast.

It seems only yesterday that ‘metaverse’ was just an ill-defined buzzword mostly used by tech giants and innovators. Now metaverse is a real, blossoming ecosystem that is a must-have for the MICE industry and many others.

Whilst doubts and hesitancy about its longevity and potential have largely dissipated, the urgent question remains: ‘How can we actually create value from the metaverse?’ With many different versions now available, businesses might ask ‘which metaverse?’ as well.

Having recently launched our own metaverse platform (YAOLAND), I can share some tips from experience on how to find ‘real business’ in the virtual world.

It’s now or never

Let’s start with the obvious: The time to enter the metaverse is now, if you haven’t already. The market has already started to transition from theorising to actively exploring the metaverse, and more shillyshallying will only result in being left behind.

According to Pico’s annual market survey released in August, less than 30% of businesses have yet to even consider metaverse activity. Being amongst the first companies in the metaverse does not necessarily mean profits; but being late to the party will likely make profits harder to achieve.

What’s your ultimate purpose?

Your business’s metaverse goal might be to stimulate demand across new and existing market segments, for which you will need engaging content. Or you may be aiming to build brand experiences and communities, for which an immersive experience is necessary.

In short, whether you are attempting to create experiences, foster interaction or spur engagement, you must clearly identify your goals and develop a value-focused strategy.

Some common business opportunities in the metaverse include sales of products and spaces, creation of experiences and events, provision of distance work and training, or marketing services.

For example, The Sandbox, one of the most popular metaverse platforms, launched with the clearly defined goal of serving as “community-driven platform where creators can monetise voxel ASSETS and gaming experiences on the blockchain”. The Sandbox have since found great success via cryptocurrency and land transactions by corporations and other users.

The China-based YAOLAND metaverse platform, on the other hand, has positioned itself as a marketing and NFT platform for brands. It generates revenue by offering a virtual marketing platform and services to corporations, and has launched NFTs in

collaboration with museums and artists, including the National Gallery in the UK.

Find your place

Some of the more common business activities surrounding the metaverse ecosystem involve delivering immersive content and experiences in existing platforms, and developing a proprietary comprehensive platform for marketing, entertainment, etcetera.

By building your metaverse presence around your business’s strengths, you are taking a cost-efficient shortcut to capturing value.

YAOLAND is a good example: Its founders – China Unicom subsidiary Shanghai Wocheng, Net263 Ltd, and Pico – have contributed their respective expertise in experiential marketing, 3D virtual streaming, cloud gaming and rendering, along with a large existing mobile user base. Capitalising on this know-how and array of resources, YAOLAND positions itself as a HTML5 immersive gamified virtual marketing platform, providing both engaging content to users and brand activation platform for corporations.

Steps to success

There can be no one-size-fits-all solution to your metaverse ambitions. Finding what will work in relation to your company’s strengths, market trends and audience preferences is to some extent a matter of trial-and-error, testing and adaptation.

That doesn’t mean launching new initiatives with a reckless abandon; instead, develop your new ideas thoughtfully to explore opportunities such as NFTs, immersive experiences or native advertising, and to establish a solid yet flexible metaverse presence.

All your activities should contribute to understanding your audience. Data gained from users will enable you to analyse their behaviours and experiences and further narrow down what works, what doesn’t, and what might hold potential. Creating or adopting an effective data-driven analytics solution is therefore essential for business in the metaverse.

Finally, be prepared to scale your metaverse capabilities, as market conditions there can change fast. Source the talent you need and establish the technology infrastructure and tooling in advance, whether through expanding your talent acquisition and development programme or by establishing a partnership with a technological powerhouse.

Conclusion

By following these steps, you can form a clearer picture of your place in the metaverse and where the monetisation and business opportunities lie.

But this is far from being the last word on the metaverse. It’s early days yet, and we have barely scratched the surface of its full potential. My best advice is to dip your toe in now; the sooner you do, the sooner you’ll find what awaits you.

48 HONG KONG BUSINESS | Q4 2022
LAWRENCE
Group Chairman and CEO Pico Far East Holdings Limited
OPINION

UK INHERITANCE TAX EXPLAINED

Inheritance Tax (IHT) is a tax levied on your estate (property, savings and possessions) once you pass away.

The funds from your estate are used to pay IHT to HMRC. HMRC received £6.1 billion in IHT between 2021-2022.

The IHT payment is arranged by the person dealing with the estate (called the ‘executor’ if there is a will).

A single person currently has a nil band rate allowance of £325,000. This means IHT is due if the net value of the estate is above this amount.

A married couple (under UK Law) have a combined nil rate band allowance of £650,000 IHT is due if the net value of the estate is above this amount.

If you leave your home to your children or grandchildren, the nil rate band can increase to £500,000.

Any amount which exceeds the nil rate band is taxed at 40%.

Certain types of pension fall outside of your estate and are exempt from IHT.

If you receive an inheritance after someone passes away, you as the beneficiary may then have to pay IHT.

Soteria IHT Planning Service assists with the reduction or mitigation of the main taxes associated with owning UK investment property.

Learn more at: www.soteriatrusts.com or www.soteriatrusts.com/events +852 2168 0626 | enquiries@soteriatrusts.com

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LEARN HOW
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4 HONG KONG BUSINESS | Q4 2022