Buyer walks away from US$32 million Hong Kong luxury home, as trade war and protests sap appetite for real estate investment
- An unidentified Hong Kong buyer has walked away from a contract to buy a HK$251.23 million luxury home in the Deep Water Bay neighbourhood, forfeiting a HK$12.5 million deposit
- The property, at 8 Deep Water Bay Drive, is a luxury apartment measuring 3,641 square feet
A Hong Kong customer has backed out of buying a HK$251.23 million (US$32.11 million) luxury home in the Deep Water Bay neighbourhood, marking the second property default in nine days.
The buyer, who is unidentified, failed to conclude the sales contract for the 3,641-square foot (338 square metres) apartment on the ninth floor of Tower One at 8 Deep Water Bay Drive, forfeiting a HK$12.56 million initial payment made to the developer Nan Fung Development.
Deep Water Bay, located on the southern shores of Hong Kong island, is an enclave for some of the city’s wealthiest people, including Li Ka-shing, the tycoon affectionately known as “Superman” for his dealmaking prowess. Still, the affluent neighbourhood is no shelter from the year-long US-China trade war that has buffeted Hong Kong’s economy, which has decimated business sentiment and confidence.
“Buyers will be taking a critical look at their investments, especially for these super deluxe homes that used to set one price record after another,” said Vincent Cheung, managing director of Vincorn Consulting and Appraisal Agency, adding that the investment return on luxury homes is at 2 per cent, less than the 2.8 per cent for mass housing. “More default cases could emerge in the coming months if the US-China trade war fails to settle.”
Hong Kong’s sentiments had also been downbeat since mass protests broke out over the past two weeks in opposition to the local government’s plan to introduce legislation that would allow for the extradition of criminals to other jurisdictions, including mainland China.
“Uncertainty is the one thing that investors least want to see in the market,” said Alva To, Greater China vice president and head of consulting at Cushman & Wakefield. “The huge protests triggered by the extradition bill and the escalated US-China trade war have hurt the mood for investments.”
Nan Fung’s assistant general manager Lee Chun-tung confirmed the buyer at 8 Deep Water Bay Drive had forfeited the payment due to “personal reasons,” without divulging the customer’s identity. Nine of the 52 luxury apartments at the complex had been sold.
Most property investors will stay on the sidelines while the economic outlook for Hong Kong remains dimmed by the US-China trade war, with the impact being “stronger at the top end of the residential property market,” said JLL’s managing director and head of capital markets Joseph Tsang.
Prices at Grand Le Pont started from HK$4.66 million (US$595,000) for a 353-square foot unit to HK$9.3 million for a 738 sq ft flat after discounts, according to a statement from the Shenzhen-based developer.
Tycoon Lee Shau-kee’s Henderson Land fared far worse. All 33 flats at Novum East in Quarry Bay went unsold as of 6pm, while only one of 13 was sold at Novum West in Sai Wan.
