Cash Rich Buyers Take Advantage of Hong Kong's Peak Distress Amid 50% Price Slump

Cash rich buyers in Hong Kong are taking advantage of the distress in the ultra-luxury property sector, with prices on The Peak averaging 50% below pre-pandemic valuations. According to a Savills report, many of these distressed sales result from property owners needing to settle debts.

Significant Distressed Sales on The Peak

In recent transactions, four mansions on Plantation Road were sold for HK$1.1 billion (US$141 million), properties that belonged to real estate developers Ho Shung-pun. Additionally, a house formerly owned by China Evergrande Group chairman Hui Ka-yan fetched HK$838 million.

Market Trends and Financial Pressures

As financial difficulties rise among veteran investors, Raymond Lee, CEO of Savills Hong Kong, Macau, and Greater China, indicated that overall property prices continue to trend down, affecting commercial properties and residential valuations. July saw a 1.9% decrease in lived-in home prices, marking the lowest level in nearly eight years.

Impact of Interest Rates

The rising interest rates, which pushed Hibor above 5%, have increased the financial pressure on property owners, pushing banks to call loans and compel owners to sell at lower prices. Analysts note that this downturn is similar to past market adjustments but may stabilize as the Federal Reserve considers rate cuts.

Future Market Outlook

Looking forward, Thomas See, senior associate director at Savills, suggests that prices on The Peak have dropped significantly, attracting cash rich buyers, who are keen to monitor the market as conditions evolve. While a potential stabilization may occur once the Fed implements rate cuts, Lee warns that the downward trend in property prices is ongoing.