Hong Kong’s superluxury homes have lost more than a quarter of their value. Prices haven’t hit the bottom yet.
3 min
China’s economic slowdown is wreaking havoc on Hong Kong’s luxury property market .
The most expensive homes in the city are changing hands at steep discounts to what they were worth just a few years ago. Chinese property tycoons, struggling to contain the fallout of their collapsing business empires, have become forced sellers. Bank lenders are seizing properties after luxury homeowners miss loan payments.
The average selling price of superluxury homes, defined as those worth more than the equivalent of $38 million, has fallen by more than a quarter since the middle of 2022, said Cherrie Lai, senior director and head of residential sales in Hong Kong at Savills . It will fall further this year as sellers accept reduced prices to cash out quickly, she said.
The slide in prices shows the fallout of China’s sputtering economy, which is suffering from deflation , slowing exports and moribund consumer confidence. A continuing real-estate slowdown in China is proving particularly painful, since the country’s big-spending property magnates were behind some of Hong Kong’s biggest luxury-property deals in recent years.
Hong Kong’s property market has also been squeezed by rising interest rates in the U.S. The Hong Kong dollar is pegged to the U.S. dollar, and the city’s de facto central bank matches Federal Reserve interest-rate increases. But the U.S. market has held up much better: Nine-figure home sales in places such as California and Florida have skyrocketed , and luxury-home prices in the top 5% of the U.S. market have soared over the past decade.
The luxury homes up for grabs in Hong Kong include three mansions linked to collapsed real-estate company China Evergrande , said Victoria Allan, founder of Habitat Property. Local media reported they were ultimately owned by Hui Ka Yan , the company’s founder.
The three properties, which are adjacent mansions on a hillside road known as Black’s Link, have been seized by creditors. House 10B was sold for about $115 million in 2019 but it is now valued by banks at roughly $55 million, said Allan. It has yet to find a buyer. The other two properties could be put on the market next month, she said.
Chen Hongtian, the mainland-Chinese founder of property-investment firm Cheung Kei Group, bought a luxury high-rise apartment occupying an entire floor in a building designed by architect Frank Gehry in 2015, paying about $49.5 million. It was later seized by a creditor, according to official records. In September, shipping magnate Kwai Sze Hoi bought the property for $53.4 million, records show, below what property agents said was a market valuation of about $87 million at the time.
Homes seized by creditors usually sell at a discount to market prices, property agents say.
A waterfront house at Residence Bel-Air, a luxury residential development, belonged to Mai Fan , the chief executive of Kaisa Group —another developer that defaulted as China’s property crisis widened in recent years. He acquired the house through a company called Million Link Development in 2017, corporate and land records show, at a time when property prices were still climbing. Receivers were appointed to handle the property in 2021 and sold the house the following year for about $46 million, according to the land registry.
In one of Hong Kong’s top sales in recent years, a local businessman sold his house for the equivalent of about $107 million last month, well below the initial asking price of $166 million, according to Savills. It is located on Hong Kong’s Victoria Peak, a mountaintop neighbourhood that is home to business moguls and celebrities living in some of the city’s most expensive properties.
“China still has very wealthy people, but they’re a different group now,” said Victor Cheng, a realtor in Hong Kong. “They’re not the highflying property moguls but those who may not have made as much when China grew rapidly but whose businesses grew steadily.”
He said the new breed of luxury-home buyer in Hong Kong is cash-rich and less likely to load up on debt.
Some mainland Chinese homeowners have been forced or pressured to sell—often at around 20% below market prices—because they need cash to pay off debt, said Cheng. Some top executives from the mainland previously bought trophy homes and only used them occasionally without renting them out, he said.
Data analysed by online real-estate marketplace Spacious.hk suggest a tougher time ahead for luxury homes. The number of sale inquiries on the platform for homes priced at the equivalent of $10 million or above fell 45% in the past 12 months, said Spacious.hk Chief Operating Officer James Fisher. Inquiries for homes under $1.3 million and for those priced between that and $3.2 million fell by 8% and 25%, respectively.
The price index for private homes slumped to a seven-year low by the end of 2023, according to Hong Kong’s Rating and Valuation Department.
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A five-bedroom Palo Alto home designed by Steven Ehrlich is listed for $44 million, making it the city’s most expensive listing. Built around a dramatic concrete spine, the home features four courtyards and a pool.
3 min
For years, tech entrepreneur Asher Waldfogel and his wife, Helyn MacLean, dreamed of building a modern house in Palo Alto, Calif.
The couple, however, worried about clashing with the Mediterranean-style architecture typically associated with their neighborhood of Old Palo Alto.
So they tapped architect Steven Ehrlich to create a design that paid homage to its surroundings with stucco, mahogany and titanium zinc cladding. They spent $20 million over several years building the house, completed in 2005.
Now looking to be closer to their adult daughter on the East Coast, they are putting the five-bedroom home on the market for $44 million—the most expensive listing in Palo Alto.
Waldfogel is an angel investor who co-founded Redback Networks, a telecommunications-equipment company. MacLean previously had a career in fundraising.
The couple purchased the roughly 0.4-acre site for $7.1 million in 2000 and demolished a circa-1930s Spanish Colonial home. The house they built pinwheels around a central staircase. It has 7,900 square feet of livable space, with four distinct courtyards and a pool.
A key feature of the home is a cast-in-place concrete wall, or spine, that is two stories high and about 80 feet long. “There’s a little bit of controlled chaos in what comes out of the form,” unlike a perfectly uniform surface, Waldfogel said. “If you want that, you do it in plastic.”
Waldfogel said he and his wife are thinking about the next phase of life now that their daughter is grown, although they have not decided where they will move. They also have a home in Sun Valley, Idaho.
“Right now we’re just trying to emotionally let go and decide what to do next,” he said.
Palo Alto, an epicenter of venture capital and tech startups in Silicon Valley, is home to some of the country’s biggest tech titans. Sales volume and prices are rising, with a median sale price of $3.5 million for the three months ending in August, up 5.8% year-over-year, according to real-estate brokerage Redfin.
Arthur Sharif of Sotheby’s International Realty—San Francisco Brokerage has the listing.
