China Huarong breaks ground on its first property development in Hong Kong
Luxury residential tower underway on Mosque Street will likely be marketed towards mainland buyers
China Huarong Asset Management, one of the mainland’s biggest financial asset management firms, has broken ground on its first property investment in Hong Kong in a move to tap growing demand from the mainland.
Through its property unit Huarong Real Estate, the asset management firm on Thursday will start construction work on a residential tower at Mosque Street, Mid Levels West. Total construction and land costs for the 49,000 square foot tower will be more than HK$1 billion, according to the company.
“It is the company’s first property investment in Hong Kong, also the first one outside China,” a company spokesperson said.
Huarong has property investments in many mainland provinces such as Guangdong, Shandong, Hunan and Fujian, It also has property development in Beijing.
The investment came as mainlanders showed growing interest in Hong Kong real estate.
According to property agent Centaline Property Agency, one of every five luxury homes sold in the second quarter were bought by mainlanders. It represented an increase of 2.8 per cent quarter on quarter, and the highest level in 14 months.
An increasing number of mainlanders have returned as they expect Hong Kong’s housing market to bottom out, Centaline said in a report.
More wealthy Chinese investors are looking to diversify their holdings and invest in Hong Kong as mainland governments are imposing property measures to cool the sizzling property market.
“Like many Chinese developers who build residential projects offshore, their buyers are mainland buyers,” said the spokesperson.
Huarong bought the site at Mosque Street from a joint venture between Soundwill Holdings and Eagle Fund in June for HK$820 million or 16,532 per sq ft.
Established in 1999, Huarong was formed to help resolve some 1.3 trillion yuan of bad debt at the country’s top four state-run banks. Known as “bad banks”, they buy soured loans at a discount from the country’s giant state lenders and then work them out, hopefully profiting along the way.