Six months after Hong Kong reopened to the world, the city still has a steep climb to reclaim its place as Asia’s premier finance and tourism hub.

Hong Kong, led by former policeman and now Chief Executive John Lee, has been pushing hard to revive the city’s reputation with high-level events, new visas programs to lure top talent, tax concessions for the wealthy, and free airline tickets for visitors.

But the Hong Kong of old — self-proclaimed as Asia’s World City — will be hard to resurrect. Tens of thousands of high-skilled workers left to escape the city’s Covid regime and a crackdown on freedoms after Beijing imposed a national security law in 2020. The city suffered its biggest workforce decline on record last year, causing major labor shortages.

The state of global markets and concerns over recessions haven’t helped either. Tension between China and the US has dented the city’s allure and the recent banking crisis, including the collapse of Credit Suisse Group AG, has further heaped pressure on the financial industry. Big banks including Goldman Sachs Group Inc. have made deep cuts in jobs focused on dealmaking in China and Hong Kong as part of global cuts.

Largely following China’s strict approach to combating Covid, the city’s quarantine measures crippled the finance industry and triggered an outflow of bankers. Singapore has been the big winner with a boon in hedge funds and family offices, and dethroned Hong Kong as Asia’s top financial center last year, according to the Global Financial Centres Index.

Hong Kong is now seeking to revive the industry, in part by opening up for crypto firms and seeking to lure more family offices with tax breaks.

The following metrics provide a glimpse of the progress.

Financiers Return

The outflow of bankers and other professionals is showing signs of starting to reverse. In the first five months Hong Kong approved about 3,700 new visas for financial services workers via the four established visa programs. That pace is almost equal to pre-pandemic levels, according to Immigration Department data.

On top of the traditional routes, there’s also Top Talent Pass — a new visa program to attract skilled workers. It attracted some 84,000 applications as of May-end, of which about 49,000 were approved, according to Lee.

While the program is helping, any immediate boon will be slow to materialize since financial institutions generally need time to lay out new strategies and the banking turmoil has sapped confidence, according to Josephine Chung, director of Hong Kong-based consultant Compliance Plus Ltd., which advises on compliance and licensing for financial institutions.

IPOs Slide

Once the world’s largest market for initial public offerings, Hong Kong’s dealmaking machine remains in the doldrums.

Last year, the city’s exchange saw a 70% plunge in fundraising from 2021. This year hasn’t been much better, even though tensions between the US and China had many in the city betting that Chinese firms delisting in the US would turn to Hong Kong.

Companies debuted a total of $2.24 billion of shares as of June-end, down 17% from a year earlier, data compiled by Bloomberg. That marks the slowest first half since 2003, when the city was affected by the deadly SARS virus.

Officials have sought to revive business by lowering the listing threshold in terms of size and revenue for advanced technology firms, while also courting potential issuers in the Middle East.

But President Xi Jinping’s tightening control over the nation’s technology industry — and businesses as a whole — poses a risk. Mainland China firms dominate IPO fundraising, raising 97% and 98% of the total amounts in 2020 and 2021. This year, the 16 largest IPOs have been China-based, raising 88% of the total.

Office Space

Demand for office space has slumped as banks trim costs and cut staff amid a slowdown in dealmaking and as some multinational companies have moved out of Hong Kong. The overall grade A vacancy rate in Hong Kong was almost 15% in April, more than three times higher than in 2019, according to Colliers International Group Inc. To make things worse, the prestigious financial district of Central has seen a surge in supply for the first time in more than a decade.

While the reopening of the border with mainland China could improve the market as Chinese companies return, analysts at Savills Plc still expect rents to fall by 10% in 2023 given the high vacancy rate and doubts over Hong Kong and China’s economies.

Some bright spots are emerging in the long-suffering retail space. A mall in the premier shopping district of Tsim Sha Tsui rented out three floors to a dining and entertainment group for almost $900,000 a month, the biggest lease by size and value since the pandemic ended, according to a report by the Hong Kong Economic Times.

Home Prices

The housing market is faring better than the office sector. The border reopening has lifted market sentiment with expectations that mainland Chinese would return to buy properties in the city. Home prices have risen 6.3% so far this year, but are far from recouping last year’s 16% slump, data from Centaline Property Agency show.

The recent recovery could also be short-lived. The market is showing signs of weakness as interest rates rise. Home sales in May were 35% lower than a year earlier, according to government data. Moody’s Investors Service expects residential prices to be largely flat in the second half of the year as a result of more higher rates, capital market volatility and higher home completion.

Hello Hong Kong

Hong Kong’s bid to lure back tourists has been disappointing. While the number of visitors has increased from near zero over the past few years, the crowds expected to once again throng the city’s shopping streets, malls and high-end restaurants have been slow to materialize.

Stung by a lack of workers, the city has had problems even handling the small amount of visitors coming in with reports of mainland tour groups having to eat noodles while standing on the sidewalk. The number of visitors rose to almost 13 million in the first half of the year, up from the 2021 trough of 72,000. Before the pandemic hit, the city attracted some 60 million visitors per year.

One of the city’s main tactics in luring back visitors has been conferences. A string of mega events have returned, including Art Basel and the Rugby Sevens. The government also jumped on the bandwagon, hosting a global central banker meeting and inviting more than 100 family offices to the inaugural Wealth for Good summit, where officials offered tax breaks and other financial perks to get the super rich to set up shop in Hong Kong.

Business is slowly returning, with banks extending opening hours to deal with the inflow and insurance firms seeing a return of mainland customers. Insurance sales to mainland visitors jumped nearly 28 times in the first quarter to HK$9.6 billion ($1.2 billion), about 75% of the level recorded for the same period in 2019, bolstering the performance of China Life (Overseas) and global competitors including Prudential Plc and AIA Group Ltd.