More financially stressed property owners are putting their assets in Hong Kong up for sale at big discounts this year as high borrowing costs weigh on mortgage repayment while experts project further market weakness.
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Savills is helping the Lun family of Winland Group to find a buyer for Winland House, an 84,510 sq ft commercial building in Cheung Sha Wan, for about HK$700 million (US$90 million). The family also hired Savills to sell some units in Lippo Centre in Admiralty for about HK$450 million, or 36 per cent below its acquisition cost eight years ago.
The Lun family was also said to have recently sold three floors in Shun Shing Building in Tuen Mun for HK$118 million, and two floors in Odeon Building in North Point for HK$107 million, according to local news reports.
“We have seen a 20 to 30 per cent quarter-on-quarter increase in the stock list,” said Reeves Yan, executive director and head of capital markets at CBRE Hong Kong. “These property owners wanted to reduce debt to ensure their financial status remained healthy.”
03:39
Shop occupancy recovers in Hong Kong, but vacant stores still visible across the city
Shop occupancy recovers in Hong Kong, but vacant stores still visible across the city
Policymakers in the US and Hong Kong kept their key interest rates unchanged last month amid new inflation challenges, after lowering them three times last year. The policy uncertainty has become the biggest factor stoking leverage concerns among property owners.
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Borrowing costs were expected to remain high in the next six to 12 months, offering investors little relief on mortgage repayment, Yan added.