The Arch Sky Tower, a luxury residential building in West Kowloon, pictured on February 27, 2023. - Photo: Yik Yeung-man/SCMP
HONG KONG: Financially pressured Hong Kong and mainland Chinese tycoons continue offloading real estate assets in the city at loss as the market sees a revival in transactions, attracting more bargain hunters.
A three-storey penthouse apartment at The Arch complex atop Hong Kong’s Kowloon station sold on Tuesday as part of a six-unit portfolio of properties under receivership. The portfolio sold for HK$410 million (US$52.7 million) – 68 per cent less than the HK$1.3 billion asking price in 2021.
The portfolio, including six parking spaces, belonged to Hui Chi-ming, the former chairman of Sino Union Petroleum & Chemical International, according to the Land Registry.
Record interest rates, combined with a property slump in Hong Kong and mainland China, have driven some highly leveraged borrowers to resort to distressed sales. Meanwhile, the long property downturn has eroded the personal fortunes of local and mainland business owners and real estate tycoons.
“We will continue to see financially pressured owners offloading assets until interest rates come down substantially,” said Tom Ko, executive director and head of capital markets for Cushman & Wakefield in Hong Kong.
The penthouse on the 80th through 82nd floor of The Arch’s Sun Tower (Block 1A) is dubbed the Emperor’s Home for its ostentatious decor. It boasts a saleable area of 4,398 sq ft and a rooftop area of about 2,206 sq ft, providing unobstructed views of Victoria Harbour, according to CBRE, the sole agent appointed by the receiver.
Meanwhile, the family of Hong Kong’s late ‘Shop King’ Tang Shing-bor is trying to sell its Hotel Ease Access in Tsuen Wan, according to Cushman & Wakefield, the sole agent. The 21-storey, 170-room hotel is valued at HK$300 million, down 40 per cent from when it was put on sale last year.
It is clear now that financially strained tycoons from Hong Kong and mainland China are increasingly offloading property assets at significant losses as the city experiences a resurgence in transactions, attracting bargain-seeking buyers.
Sky-high interest rates and a prolonged property downturn in Hong Kong and mainland China have forced some highly leveraged owners into distressed sales.
"We will continue seeing financially pressured owners offloading assets until interest rates come down substantially," said Tom Ko, executive director and head of capital markets at Cushman & Wakefield in Hong Kong.
The penthouse, spanning the 80th to 82nd floors of The Arch’s Sun Tower (Block 1A) and dubbed the "Emperor’s Home" for its lavish design, features a saleable area of 4,398 square feet and a rooftop spanning 2,206 square feet. It offers panoramic views of Victoria Harbour, according to CBRE, the appointed agent.
Meanwhile, the family of the late "Shop King" Tang Shing-bor is also divesting assets, including the 21-story, 170-room Hotel Ease Access in Tsuen Wan, valued at HK$300 million – 40% lower than its valuation last year. Another hotel owned by the family, Hotel Ease in Lai Chi Kok, sold for HK$220 million in September, a significant drop from its estimated value of HK$410 million when it was listed in 2022.
Since Tang's passing in 2021, his family has sold numerous properties, including shops, offices, and parking spaces, many at substantial losses.
Similarly, Agile Group chairman Chen Zhuolin recently sold nine units in Hamburg Villa on Eastbourne Road in Kowloon at a 58% discount, receiving HK$90 million compared to their original valuation of HK$213 million.
Despite the distressed sales, improving market sentiment is drawing renewed interest from veteran investors and mainland buyers. Eased mortgage rules and a slight dip in interest rates since September have encouraged transactions. Residential home prices saw a modest 0.62% increase in October, the first uptick since March.
Edwin Li, founder of Bridgeway Prime Shop Fund Management, recently purchased a four-bedroom unit in Hollywood Heights, Mid-Levels, for HK$58 million, reflecting optimism that the property market has bottomed out. Analysts expect residential prices to stabilize, with meaningful recovery anticipated in the latter half of next year.
High-profile international investors are also taking interest. In July, Bob Prince, co-chief investment officer at Bridgewater Associates, acquired a HK$95 million luxury home in St. George’s Mansions on Kadoorie Avenue, reflecting growing confidence in Hong Kong as a key financial hub.
Despite recent improvements, lived-in home prices have dropped approximately 7% this year, with experts predicting gradual stabilization but no significant recovery until late 2024.
