Not a happy year: How Hong Kong's rich and famous lost billions in 2024

Hong Kong's elite suffer massive property losses in 2024 as high-interest rates and a weak economy force fire-sale deals, with discounts up to 70 per cent on luxury assets

Hong Kong’s wealthiest individuals faced heavy losses in property deals in 2024, largely due to liquidity issues stemming from high interest rates and a weak economy. These challenges forced many to sell their properties at steep discounts, according to a report by South China Morning Post.

 

A notable example is Chen Zhuolin, chairman of Agile Group, a mainland Chinese developer facing distress. In November, he lost $16 million from the sale of nine flats in Kowloon Tong’s Hamburg Villa. Originally valued at HK$213 million ($27.3 million), these units were sold at discounts of up to 63 per cent, less than half their original investment value from six years earlier, the report said.

 

Falling property prices

According to Reeves Yan, head of capital markets at CBRE Hong Kong, prices for office and retail properties have dropped by 50 to 70 per cent from their peak levels. This sharp decline is attributed to the slump in mainland China’s property market, which has impacted local and mainland real estate moguls, including Hui Ka-yan, founder of China Evergrande Group, and the families of Ho Shung-pun, Tang Shing-bor, and Chen Hongtian, the report said.

 

Agile Group, based in Guangzhou, faced significant liquidity issues, including a failure to pay interest on a $483 million bond in May. The company has also sought refinancing for a HK$894 million loan, using its Quarry Bay project as collateral, the report mentioned.

Distressed sales of prime properties

For example, a premium office building in Hung Hom, One HarbourGate East Tower in Hong Kong’s Kowloon City, was sold in November for HK$2.65 billion, a 41 per cent discount from the price paid by Cheung Kei Group in 2016. The sale was a result of a short-term cash flow issue for Chen, who lost control of the asset, the report said.

 

In addition, a 9,200 sq ft house on The Peak, also owned by Chen, has been seized by creditors and is still awaiting a buyer.

Future outlook of real estate in HK

Looking ahead to 2025, Tom Ko, executive director at Cushman & Wakefield Hong Kong, anticipates further distressed commercial real estate sales due to persistent market challenges. Although a decrease in interest rates could stimulate transactions, overall market pressures are expected to remain, given financial constraints and ongoing corrections, SCMP reported.

Surge in distressed luxury residential sales

The luxury residential market has seen an increase in distressed sales, with prices in prime areas like The Peak and Tai Tam dropping by at least 30 per cent from previous highs. According to real estate firm Savills, over 100 homes in The Peak were listed for sale in September, and the number of financially distressed sellers has risen substantially.

 

A notable sale in May involved a mansion at 10B Black’s Link, owned by an Evergrande executive, which sold for HK$448 million — that’s 44 per cent less than the market estimate of HK$800 million. Additionally, the Ho family sold four mansions on The Peak in July at a 35 per cent discount to settle debts.

 

Experts predict that the number of distressed residential property listings could increase in 2025, as many homeowners continue to struggle with high-interest loan refinancing.

 

The residential market overall saw a slight uptick in home prices in November, marking the second consecutive monthly increase. However, home prices had fallen by 6.55 per cent in the first 11 months of 2024, with a steep 27 per cent drop from the record high in September 2021.