Buyer of house on The Peak in Hong Kong walks away from deal – loses US$4.6 million deposit

A buyer has walked away from the purchase of a luxury house on The Peak, losing a deposit of some HK$36.09 million (US$4.6 million) in the latest sign of trouble in Hong Kong’s property market.

The unidentified buyer did not proceed with the transaction for House 16 on Mount Nicholson, according to official documents, after agreeing to buy it for HK$721.88 million on December 31.

“It is definitely not good news for the market,” said JLL executive director Joseph Tsang.

“There are stories about buyers walking away from their purchases every day, but this one is more eye catching.”

Even luxury home at Asia’s priciest address is not immune to price slump

The house, with a private garden, rooftop and swimming pool in Asia’s most expensive address, was sold at a unit price of HK$90,484 per square foot in December, more than 7 per cent cheaper than the adjoining house which was sold in April.

Wheelock & Company, the co-developer of Mount Nicholson, said financing may have been behind the decision.

Stewart Leung Chi-kin, chairman of Wheelock Properties, a privately run property arm of Wheelock and Co, confirmed that the deal has been cancelled.

“We tried to approach the buyer. We did not know why the buyer decided not to proceed with the purchase.”

He confirmed the five per cent deposit was also forfeited, but did not identify the buyer.

“The deal was clinched through a representative of the buyer, who is a Hong Kong Identity Card holder,” he said.

Leung said the company had received three bids when the house was put on the market, and it went to the highest bidder.

He said that there has never been a case of forfeiture before at the development and believed that it was a one-off case and will not affect the super luxury market.

“[The cancellation] is the first time since we launched the project two and a half years ago,” Leung said.

Mount Nicholson sealed its reputation as the priciest address in Hong Kong with the top three most expensive units in Asia in 2017.

In November 2017, a single buyer paid HK$1.16 billion (US$149 million) for two units on the same day.

That buyer paid HK$560 million for a 4,242 sq ft four-bedroom unit, about HK$132,000 per square foot, on the 12th floor. On a square-footage basis, that makes it the most expensive residence in Asia.

The same buyer also paid HK$600 million, or HK$131,000 per square foot, for a 4,579 sq ft unit on the same floor, putting it in second place.

As Hong Kong’s property market cools rapidly from its over two year surge up until last August in the face of a slowing economy, rising mortgage rates and uncertainties over the US-China trade war, cases of cancelled sales have been rising – there were nine in the first nine days of this year alone.

One notable one involved the HK$50.62 million purchase of a 1,576 sq ft unit at the luxury Ultima residential development in the Ho Man Tin district, where the buyer ­forfeited a HK$2.53 million down payment, according to the ­government website.

Other cancellations in new projects included ones in Grand Central in Kwun Tong and the LP6 development in Lohas Park, Tseung Kwan O.

“But what is most worrying is the rising number of homes being repossessed by banks and the growing number of companies filing for bankruptcy, said Tsang.

“This is a reflection of the worsening economy, although it is still too early to say whether it would trigger a wave of defaults.”

So far 13 houses of the 19 at the Mount Nicholson development, launched in 2016, have been sold, excluding House 16.

Cai Kui, ex-husband of mainland developer Longfor Properties’ chairwoman Wu Yajun, bought House 2 for HK$1.39 billion, or HK$151,785 per sq ft, the most expensive home in the ­development.

Others owning property there include Alice Ho Chiu-yan and Sabrina Ho Chiu-yeng, daughters of casino magnate Stanley Ho, and the family of Edwin Leong Siu-hung, the founder of Tai Hung Fai Enterprises.