PanamaTimes

Friday, Mar 29, 2024

Hong Kong’s business elite are cashing in their luxury villas at a loss as they brace for the city’s worst economic recession

Hong Kong’s business elite are cashing in their luxury villas at a loss as they brace for the city’s worst economic recession

Many company owners and executives are looking to free up much-needed cash to keep their businesses going as pandemic ravages the economy, property agents say. The city’s economy will shrink by 4 to 7 per cent this year, Financial Secretary Paul Chan Mo-po warned this week

Some of Hong Kong’s wealthy property owners are cashing in their luxury houses, often slashing the price to sell at a loss, as the city faces the threat of its worst recession ever.

Many of them are company owners and executives looking to free up much-needed cash to keep their businesses going as the coronavirus pandemic ravages the economy, according to property agents.

“People are losing jobs or getting pay cuts because their companies are not doing well. Thus the business owners, who are the major purchasing force of these luxury homes, are not doing well either and some may already be seeing liquidity problems and need quick money to stop bleeding,” said Vincent Cheung, managing director of Vincorn Consulting and Appraisal.



“Offloading these luxury homes is a quick fix. At this moment the sellers are even willing to cut the price, because not many people are willing to take a risk of placing a big bet on luxury homes now.”

A villa measuring 1,896 square feet at Casa Marina 1 in Tai Po was sold for HK$18.9 million (US$2.4 million) in late April, with the seller making a loss of HK$4.5 million on the original investment of HK$23.4 million in 2015.

Another 2,800 square-foot ,with a garden the same size, in Geneva East Avenue of Valais in Sheung Shui went for HK$43.5 million in March. The owner, who bought the property seven years ago, made a HK$4.5 million loss on the transaction.

“The homeowner was pessimistic about market prospects, so he did not hesitate to cash in,” said Davis Lui, an agent with Midland Realty, who brokered the sale.

“We are not sure whether such owners are having liquidity issues and are in urgent need of money, but one thing for sure is that everyone now does not want to wait any longer. Slashing 20 per cent to 30 per cent from the original asking price is not a big deal for them.

“They just want to cash out as soon as possible to either pour back into their own business or put into other investments, stocks or even cheaper properties in other regions or in other countries.”

Hong Kong’s economy is poised to take a much bigger hit than previously thought, shrinking by 4 to 7 per cent this year because of the serious and sustained impact of the coronavirus pandemic, Financial Secretary Paul Chan Mo-po warned on April 29. He said the city could be facing its worst recession ever.

“The magnitude of Hong Kong’s economic recession in the first quarter could be worse than 2008’s global economic tsunami, or the impact of the Asian financial crisis [in 1997-98],” Chan said.

Unemployment in the city surged to 4.2 per cent in the January to March period, the highest rate in nine years, rising 0.5 percentage points from the three months to February. Joblessness in the retail, hospitality, and food and drink sectors hit 6.8 per cent, a peak not seen since the depths of the global financial crisis.

Even with deep discounts on offer, there have been few takers for villas. In the first quarter only 118 new and lived-in villas were sold, fetching HK$5 billion, the lowest amount in the past four years, according to Centaline Property.

Market observers say more distressed selling will be seen in the coming months.

“We expect volumes to continue to bear the brunt with prices enjoying a certain level of support from low interest rates and low levels of new completions. Some selective distressed selling has been in evidence,” said Simon Smith, a senior director at Savills.

A withdrawal of mainland Chinese buyers will further weigh on the shrinking demand as appetite for outbound investment evaporates in China, which has just reported the first contraction in its gross domestic product in four decades.

“Some mainland vendors whose businesses face cash flow issues, and landlords of properties with multiple mortgages, will be prepared to consider offers [at deep discounts] on a selective basis,” said Smith.

George Sze, a director of Ricacorp Properties focusing on The Peak and South district, an exclusive area hosting some of Hong Kong’s most lavish properties, said just 10 transactions were made in March in South District while eight were completed in April.

“Now we barely see any buyers from the mainland, which still made up about 20 per cent of the market last year,” said Sze.

Newsletter

Related Articles

PanamaTimes
0:00
0:00
Close
Apple warns against drying iPhones with rice
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
The President of Argentina Javier Mile does not fly private, he flies commercial, with the citizens he represents. And they LOVE him for it.
Bitcoin Reaches $50,000 for First Time in Over Two Years
Belo Horizonte: Brazil's Rising Carnival Hotspot for 2024
In El Salvador, the 'Trump of Latin America' stuns the world with a speech slamming woke policing after winning a landslide election
Tucker’s interview with Putin is over 50M views on X within the first 5 hours.
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
President Nayib Bukele has proudly announced El Salvador's remarkable achievement of becoming the safest nation in the Western Hemisphere.
Former Chilean President Sebastian Piñera Dies in Helicopter Crash
This farmer seems to understand science a bit more than the event organizer, Klaus Schwab.
Facebook turns 20: From Mark Zuckerberg's dormitory to a $1trn company
The Coolest Dictator in the World" on the Path to Victory in El Salvador
Macron, France and fake news
Indian-Origin Man 'King' Arrested For Smuggling $16 Million Drugs Into US
Can someone teach Americans that not every person with slanted eyes is Chinese?
Europe's Farmers Feeding the People, Protesting Against Politicians Who Do Nothing for Their Country and Serve Only Themselves at Taxpayers' Expense
Paris Restaurant That Inspired 'Ratatouille' Loses $1.6 Million Worth Of Wine
Brazilian Police Investigate Bolsonaro's Son for Alleged Illegal Spying
Police in Brazil Raid Residence of Bolsonaro Associate Over Allegations of Illegal Spying
Border Dispute Escalates as Texas Governor Vows Increased Razor Wire
OpenAI Enhances ChatGPT-4 Model, Potentially Addressing AI "Laziness" Issue
The NSA finally acknowledges spying on Americans by acquiring sensitive data
Report Reveals Toxic Telegram Group Generating X-Rated AI-Generated Fake Images of Taylor Swift
US Border Patrol States 'No Plans' to Remove Razor Wire Installed in Texas
Bitcoin Experiences Approximately 20% Decline in Value
Klaus Schwab recently appointed himself as the Earth's "trustee of the future."
DeSantis Drops Out, Endorses Trump.
Nikki Haley said former President Trump is "just not at the same level" of mental fitness as he was while president in 2016.
Residents of a southern Mexican town set the government palace on fire in response to the police killing of a young man
Samsung Launches AI-Driven Galaxy S24, Ushering in New Smartphone Era
Judge Questions SEC's Regulatory Overreach in Coinbase Lawsuit
The Ecuador prosecutor who was investigating the television studio attack, has been assassinated.
Is artificial intelligence the solution to cyber security threats?
Vivek Ramaswamy suspends his US election campaign and endorses Trump.
Viral Satire: A Staged Satirical Clip Mistaken as Real Footage from the 2024 World Economic Forum in Davos
The AI Revolution in the Workforce: CEOs at Davos Predict Major Job Cuts in 2024
Ecuador Reports 178 Hostages in Prison Gang Standoff
The Startling Cuban Espionage Case That Has Rattled the US Government
Two Armed Men in Ecuador, Dressed as Batman and The Joker Storm the Streets.
Armed Gang Raids Ecuadorian TV Station Following State of Emergency Declaration
Anti-Democratic Canada: Journalist Arrested for Questioning Canadian Finance Minister on Support of Terrorist Group
Ecuador's 'Most-Wanted' Criminal Vanishes from Prison
Mexican Cartel Supplied Wi-Fi to Locals Under Threat of Fatal Consequences for Non-Compliance
Border Surge Leads to Over 11,000 Migrants Waiting in Northern Mexico
Outsider Candidates Triumph in Latin American Elections
As Argentina Goes to the Polls, Will the Proposal to Replace the Peso with the Dollar Secure Votes?
Fatal Shark Attack Claims Life of Boston Woman Paddleboarding Near Bahamas Resort, According to Police
×