A sore sorry site: Winland's defaults halts Elizabeth House renovations

A HK$600 million renovation project at Elizabeth House in Causeway Bay has been suspended, with developer Winland Group Holdings reportedly under financial strain amid mounting loan pressure from banks.

Launched in 2020, the redevelopment aimed to refurbish the seven-story podium of the mixed-use complex, encompassing over 230,000 square feet of retail and car park space. However, the main contractor, CR Construction Group Holdings Limited, withdrew earlier this year, citing non-payment of several installments.

According to an insider, Winland began missing payments more than a year ago and has now defaulted on three installments totaling a seven-figure sum. The source added that CR Construction currently plans to initiate legal proceedings to recover the outstanding amount.

A recent site inspection by East Week, a sister publication of The Standard, found the construction entrance sealed off, with materials, tools, and debris scattered inside. Scaffolding and safety nets have been removed, leaving concrete walls and partitions exposed. Metal cabinets and ventilation ducts remain across the floors, visible from the nearby footbridge. 

Rental Hike Doubles, Shops Struggle to Fill

Elizabeth House was a prominent entertainment landmark in Causeway Bay during the 1980s and 1990s. In 2005, Winland Group’s late founder, Lun Chi-yim, acquired the podium for HK$1.48 billion and invested HK$50 million in 2011 to refurbish it, doubling rents and tightening lease terms. 

After his death in 2014, his son Edwin Lun Yiu-kay assumed control of the group but struggled to retain existing tenants or bring in new ones. Sources noted the absence of a professional leasing team, which contributed to tenant exits and left the property in a prolonged state of vacancy.

Shifts to Aggressive Property Buying

A real estate insider revealed that under founder Lun Chi-yim, Winland Group maintained a conservative investment strategy, acquiring properties during market lows. In contrast, Edwin Lun adopted a more aggressive approach, purchasing high-end office and retail spaces at peak prices between 2017 and 2022, including major purchases in Admiralty’s Lippo Centre and the Bank of America Tower.

These acquisitions were heavily leveraged with low-interest bank financing. However, Winland expanded rapidly but was hit hard by the post-pandemic property downturn, with high vacancies and rental income failing to cover the debt. The group has since become the target of several call loans, prompting a series of asset disposals.

Since last year, Winland has sold more than 10 properties, raising over HK$2 billion. Many of the disposals were completed at a loss, including assets acquired only a few years earlier.

Despite rumors of financial distress, the insider believes the group is not facing a repayment crisis.

“Falling property values have led banks to demand lower loan-to-value ratios, leaving the group with no choice but to sell some highly leveraged assets at a loss,” the insider said.

In response, Winland Group chairman Edwin Lun told Sing Tao Daily that the company plans to appoint a new, more capable contractor, with construction expected to resume soon.