In Hong Kong’s commercial real estate market, ‘everybody has their own fair share of pain’
Hong Kong’s commercial property market has been hit by a number of factors, including an exodus of global firms and high interest rates
In the second of a two-part series, Jiaxing Li, Aileen Chuang and Salina Li explore the effects of high interest rates and other factors on the city’s commercial property market.
In the heart of Causeway Bay, a bustling Hong Kong shopping district that was once a more expensive retail destination than Fifth Avenue in Midtown Manhattan, a commercial building with shaky financing was recently thrust onto the market.
As the due date nears, the owners are feeling pressure to sell the building so they can repay the money. The public tender process for the tower, which at present has more than a third of its floors vacant, started last month with an opening price of HK$1.4 billion (US$180 million) – nearly 30 per cent lower than its peak valuation of HK$2 billion.
The fallout has reached far and wide, burning everyone from real estate moguls to savvy local investors, while banks are squeamish about lending and have been left holding a bag of bad debts – which are rising.
