Hong Kong developers rebuild cash hoard to prepare for new opportunities amid biggest market correction in four years

Some of the city’s biggest developers have sold HK$4 billion (US$516 million) of noncore assets to ready cash for new opportunities

Non-residential property market has slipped by up to 20 per cent from the mid-2019 peak, amid the longest losing stretch in at least four years.

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A man walks past a closed retail shop in Causeway Bay, Hong Kong. Photo: Winson Wong

Published: 9:30am, 20 Sep 2020Updated: 7:04pm, 20 Sep 2020

Some of Hong Kong’s biggest developers are building up their cash hoard by selling noncore assets, a move seen as readying themselves for acquisition opportunities amid the biggest market correction since at least 2016.

This year, groups including Wheelock Properties, Chinachem and New World Development have raised more than HK$4 billion (US$516 million) from the sale of retail, office and car parking spaces across the city, according to company announcements and government land records.

While those proceeds are relatively small, higher targets have been mentioned. They also added to anecdotal signs from other veteran investors who have bailed out of their holdings to prepare for better values from the current weakness. Hong Kong’s office and retail asset prices have slumped over the past four quarters in the market’s longest slide since at least 2016, according to government data.

“Having a strong cash flow is extremely important during economic hardship,” said Vincent Cheung, managing director of Vincorn Consulting and Appraisal. “Most developers tend to dispose of individual assets in noncore locations as yields are relatively poorer.”

Hong Kong is facing its worst recession on record after the economy lurched from major political crises to public health calamity over the past 18 months. Combined with a slump in tourist arrivals and spending, prices and rents of retail and office properties have fallen in tandem.

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