Luxury homes ease cash-flow troubles

Property | Staff reporter 22 Oct 2020

Some owners of luxury houses and units with cash-flow problems are using their properties as collateral to obtain multiple loans amid the pandemic.

On The Peak, a 2,363-sq-ft luxury house at Severn 8 changed hands for HK$175 million, or HK$74,058 per square feet, after HK$450 million was slashed from the initial asking price. The original owner purchased the house for HK$100.8 million in 2007.

Since last year, the original owner had taken three loans from finance companies by pledging the house.

Meanwhile, at least four foreclosed units used to back multiple loans are now available for sale at Dragons Range in Kau To Shan, sources say.

A 932-sq-ft flat at the project is available for sale at HK$13.8 million, or HK$14,807 per sq ft. The asking price is 7 percent less than what the owner paid, which was HK$14.86 million five years ago, according to the Land Registry.

At Mantin Heights in Ho Man Tin, at least two flats - each of which has been collateralized for multiple loans - are available for sale, said Midland Realty.

Two adjacent apartments at the project, measuring 1,341 sq ft in total, are available for sale for HK$30 million, or HK$22,371 per sq ft. The asking price is 3.2 percent less than the HK$31 million the owner paid in 2016, data from the Land Registry shows.

The owner had used these properties to back two loans from finance companies and had to make loss-making sales for failing to make repayments on time.

Another 698-sq-ft foreclosed flat at Mantin Heights is available for sale for HK$17 million, or HK$24,355 per sq ft.

The original owner took two mortgages by pledging the property, but it ended up foreclosed and taken back by the bank.

The owner purchased the unit for HK$19.32 million three years ago, meaning the value of the flat dived by 12 percent during the period.

In Pok Fu Lam, a foreclosed duplex unit at Radcliffe, measuring 2,541 sq ft, is available for sale for HK$65 million, or HK$25,580 per sq ft. The original owner bought the flat for HK$59.38 million eight years ago.

More homeowners are choosing to borrow usurious loans from finance companies as banks tightened lending amid the economic downturn, said Vincent Cheung Kiu-cho, managing director of Vincorn Consulting and Appraisal.

Some mainland investors adopted an aggressive investment approach by repeatedly putting their properties up as collateral to get loans, said Eric Tso, chief vice-president at mReferral Mortgage Brokerage Services.

But their payment ability weakened amid the economic downturn, and the virus has made it less convenient for mainland investors to come to Hong Kong to make payments, Tso added.

Despite the pandemic and strained Sino-US relations, however, some deep-pocketed buyers continued to pick up luxury homes.

The chief executive of Hang Lung Properties, Weber Lo Wai-Pak, purchased a 1,971-sq-ft flat at Pine Crest in Repulse Bay for HK$70 million, according to local media reports.

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