The Ins and Outs of Living in a Commercial Property in Hong Kong

Is it possible to live in commercial flats in Hong Kong? What should tenants and buyers of office spaces be aware of before they rent or buy?

The Ins and Outs of Living in a Commercial Property in Hong Kong

The Ins and Outs of Living in a Commercial Property in Hong Kong 1600 900 Vivid Invest
Is it possible to live in commercial flats in Hong Kong?  Get our take on what you need to know!


Compare the purchase of a commercial flat in company title with a residential apartment as non-Hong Kong permanent resident (or HK permanent resident with more than one residential property).

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1. Is it legal to live in a commercial property?

In newer commercial buildings, mainly grade A and B, it is explicitly forbidden. In old commercial buildings, it is a grey area where authorities generally turn a blind eye as long as the landlord complies with building safety and fire regulations. In districts like Central, Sheung Wan and Sai Ying Pun, many old commercial units and entire buildings are used residentially, even though landlords are likely in breach of government lease, occupation permit etc.

Some owners feel more comfortable living in a commercial property by registering a company at the premise and turning it into a “24-hour office.” From experience, if other units in the same building have already been converted to “24-hour home offices,” it rarely raises a concern when you work and sleep in your commercial flat. In case of a complaint, the government (likely the Lands or Building Department) must prove that 51% of your use of the premise is domestic, which is impossible if you work from home as well. The government is more concerned with “changes in use of buildings which constituted obvious or imminent danger to life and property or serious environmental nuisance.”[1] Hence, your renovation must comply with fire and safety regulations.

To check the usage of a property, you can ask the Rating and Valuation Department to issue a ‘Certificate of Primary User of Premises’ for verification. An owner may also check the Government Lease (including any conditions of grant), the Occupation Permit (issued by the Buildings Department), the Approved Building Plans (by the Buildings Department) and/or the Outline Zoning Plan (from the Town Planning Board) to ascertain the permitted uses of the property as under the HK law.

2. What to watch out for if you plan to buy a commercial property for “24-hour home office” use?
  • Compliance with commercial fire regulations. E.g. a door must withstand fire for 30 minutes and an existing sprinkler system needs to be in working order.
  • Only invest in buildings where existing landlords have already converted units for residential purposes. This is often the case in mixed commercial/residential buildings. Ways to find out if that’s the case include walking from floor to floor, checking for company names and talking to the security guard.
  • 24/7 main entrance access to the building (key or door code to the main door). Some commercial buildings only allow after-hour access by a security guard opening the main gate for you which can be quite inconvenient.
3. What are the advantages of investing in a commercial property versus a residential property?
  • Lower per sqft cost than residential (see infographic: purchase price/nsf)
  • If you are buying the commercial property for rental purposes, you will be able to collect the same or even higher rent per sqft as with a comparable residential property
  • Exempted from Special Stamp Duty[2] (ranging from 5 to 20%): Buyers can still flip the property shortly after purchase without incurring any SSD.
  • Exempted from Buyer Stamp Duty[3] (charged at 15%): This is very attractive to non-HK residents, non-permanent HK residents and HK permanent residents who already own a residential property. Stamp duties can be further reduced by buying a property in a clean company title. (see infographic: TTL stamp duty savings)
  • In contrary to the purchase of residential properties, for the purchase of commercial properties there is no increase in stamp duty charges depending on the number of properties you already own.
  • From an investment perspective, you will be able to achieve significantly higher investment returns due to the lower investment costs.
4. What are the disadvantages of investing in a commercial property vs. a residential property?
  • Mortgage only covers a maximum of 50% of bank evaluation. For newly renovated ‘home-offices’ asking prices are often significantly higher than bank evaluations since banks do not consider high-end renovations. Buying a commercial property is only of interest to cash-rich buyers.
  • Partly higher management fees and government rates
  • Higher deposits for electricity and water and higher corporate utility rates and potentially higher cost for broadband internet
  • Landlords and real estate agents do not need to provide net sqft, so it is advisable to measure the flat
  • Buyers/tenants cannot register a domestic helper (live-in) in a commercial premise
5. Can the tenancy agreement be stamped?
  • Yes
6. Does the above also apply to a residentially used industrial building?

No, living in an industrial building is not only illegal but also potentially very dangerous.[4] It is also not advisable since buyers/tenants do not have any control over neighbors. If a printing company decides to move into the flat above, you cannot complain about noisy printing presses running 24/7. Furthermore, industrial spaces are often poorly insulated, constructed and walls can off-gas harmful airborne particulates or chemicals (e.g. VOCs, Formaldehyde).

7. In the unlikely case that the authorities ask me to turn my residentially renovated and used commercial space back into an office, what would I need to do?

Follow their instructions and remove the bedroom. You would incur reinstatement costs but no penalties if you complete the works in a timeline specified by e.g. the Building Department. However, please take into consideration that the demand for commercial space is similar to the demand for residential apartments. Prices in Central and Sheung Wan for commercial and residential units are almost at the same level. Therefore, there is no asset value loss associated with a re-conversion to commercial use.”


Considering the above, the risks of buying or renting a commercial unit for residential use depending on the actual building. The risks are manageable if it is an older building where a lot of units are being used residentially and the renovations comply with the latest Building and Fire Department regulations. Keeping the legal restrictions in mind, these flats often make for better investments, since you get more space for less money, save stamp duties and can flip the property anytime.


[1] “changes in use of buildings which constituted obvious or imminent danger to life and property or serious environmental nuisance.” Source:

[2] “With effect from 20 November 2010, any residential property acquired on or after 20 November 2010, either by an individual or a company (regardless of where it is incorporated) and resold within 24 months (…) or 36 months (…), will be subject to a Special Stamp Duty (SSD).” Source:

[3] “Unless specifically exempted, BSD is payable on an agreement for sale or a conveyance on sale for the acquisition of any residential property executed on or after 27 October 2012, except where the purchaser or the transferee is a Hong Kong permanent resident (HKPR) acquiring the property on his/her own behalf (i.e. the person is both the legal and beneficial owner).” Source:

[4] There have been fire incidents with fatalities due to illegal residential occupancy of industrial buildings.


Disclaimer: The above statements are based on Vivid Invest’s ten years plus experience as a property developer in Hong Kong.  This content is for reference only.

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