A BANK trying to unload a luxury mansion in Hong Kong formerly owned by a Chinese property tycoon has slashed its price by about 60 per cent, reflecting the tepid demand for high-end real estate.
The house at 15 Gough Hill Road is on offer for about HK$700 million (S$123 million) to HK$800 million, compared with a purchase price of more than HK$2 billion in 2016, according to property agents familiar with the matter. The property was put on the market again last week after five failed tenders, according to a sales filing.
The price cut underscores the depth of the downturn for Hong Kong’s luxury real estate market, which has been hampered by the slowdown in neighbouring China. Overall, home prices have fallen to an eight-year low following rate hikes and a population outflow.
The property distress is also starting to hurt banks that have been largely immune to loan losses. The Hong Kong mansion, once owned by tycoon Chen Hongtian, was taken over by the Bank of East Asia in 2023.
The property in the upscale Peak neighbourhood overlooking the city spans more than 9,200 square feet (855 square metres) in house area and six floors. It was among the most expensive transactions per square foot in the Asia Financial hub when it was purchased by Chen.
Bank of East Asia did not respond to an e-mailed request for comment.
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Chen bought the house with 80 per cent cash and the transfer of a Shenzhen property to the seller, according to a filing from the Hong Kong stock exchange. Chen pledged the house to Bank of East Asia in 2019, according to a company registry filing. The details of the loan facility arrangement are unclear.
The home was part of a basket of properties worth US$1.4 billion that Chen lost in the real estate downturn, joining a list of fallen Chinese tycoons including China Evergrande Group founder Hui Ka Yan.
Cheung Kei Center, the former Hong Kong headquarters of Chen’s firm, was sold to Hong Kong Metropolitan University for about HK$2.6 billion in November. That was less than 40 per cent of its 2022 value of about HK$7 billion, according to a sales document.
Now in his 60s, Chen founded Cheung Kei Group by combining businesses he owned in the former British colony and nearby Shenzhen in 1990, just as China was pushing for market reform. The group soon pivoted to real estate development and financial investments after an early success in textile. BLOOMBERG
