Hong Kong’s business elite are cashing in their luxury villas at a loss as they brace for the city’s worst economic recession
- Many company owners and executives are looking to free up much-needed cash to keep their businesses going as pandemic ravages the economy, property agents say
- The city’s economy will shrink by 4 to 7 per cent this year, Financial Secretary Paul Chan Mo-po warned this week
Some of Hong Kong’s wealthy property owners are cashing in their luxury houses, often slashing the price to sell at a loss, as the city faces the threat of its worst recession ever.
Many of them are company owners and executives looking to free up much-needed cash to keep their businesses going as the coronavirus pandemic ravages the economy, according to property agents.
“People are losing jobs or getting pay cuts because their companies are not doing well. Thus the business owners, who are the major purchasing force of these luxury homes, are not doing well either and some may already be seeing liquidity problems and need quick money to stop bleeding,” said Vincent Cheung, managing director of Vincorn Consulting and Appraisal.
“Offloading these luxury homes is a quick fix. At this moment the sellers are even willing to cut the price, because not many people are willing to take a risk of placing a big bet on luxury homes now.”
A villa measuring 1,896 square feet at Casa Marina 1 in Tai Po was sold for HK$18.9 million (US$2.4 million) in late April, with the seller making a loss of HK$4.5 million on the original investment of HK$23.4 million in 2015.
Another 2,800 square-foot ,with a garden the same size, in Geneva East Avenue of Valais in Sheung Shui went for HK$43.5 million in March. The owner, who bought the property seven years ago, made a HK$4.5 million loss on the transaction.
“The homeowner was pessimistic about market prospects, so he did not hesitate to cash in,” said Davis Lui, an agent with Midland Realty, who brokered the sale.