Hong Kong’s 2024 property slump feels like it’s 1997 all over again – or is it?

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The housing supply pipeline may grow to 112,000 homes over the next three to four years, according to the forecast by the Housing Bureau at the end of March

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Salina Li

Published: 11:00am, 27 Jul 2024Updated: 11:10am, 27 Jul 2024

For Raymond Tsoi, Hong Kong’s current property slump feels like déjà vu.

The veteran investor and chairman of Asia Property Holdings, best known for his part in the HK$40.2 billion (US$5.2 billion) takeover of the world’s most expensive office tower, lost HK$4 million in 1998 when he sold sell two flats at half their purchase price because of collapsing asset prices during the Asian Financial Crisis.

Tsoi had paid about HK$11,000 per square foot for two apartments at Laguna Verde in Hung Hom, only for the developers CK Asset Holdings and CLP Holdings to slash prices by a third to HK$7,000 per sq ft within a year.

That was just the start. CK Asset, known as Cheung Kong Property Holdings until it was renamed, would later send a jolt through the market when it priced the Tierra Verde project in Tsing Yi at HK$4,147 per sq ft, below the market average. While that tactic helped the developer sell all 1,400 flats on the first day, it became the opening salvo of a price war that would crimp 70 per cent of Hong Kong’s median home price, a crash so severe that recovery took six years.

Tsoi, who has spent four decades in Hong Kong’s property industry, said he sees history repeating in the topsy turvy market. Major developers like CK Asset had lavished discounts since the start of the year, driving prices down by about 25 per cent from their September 2021 peak.

“What we are seeing now is similar” to the collapse in the late 1990s, Tsoi said in an interview with the Post. “The slowdown in transactions had started since 2019, and developers had joined the price war in the first half of this year to offload their inventory.”

The discount war is taking place amid a housing glut in the city. Developers launched 9,419 new homes in the first half, equal to 87.6 per cent of the total flats sold in the whole of last year, according to data compiled by CBRE.