Hong Kong property: discounted Mid-Levels luxury homes entice buyers amid loan distress as rates outlook improves
- Two Mid-Levels West assets changed hands recently at a big discount, a sign that deep-pocketed investors or homebuyers are coming back to the market
- Sentiment has improved amid speculation on more market-friendly measures, and popular view that global rate-hike cycle has peaked
Hong Kong’s deep-pocketed investors and homebuyers have been snapping up foreclosed luxury homes at great bargains in recent transactions, suggesting an increase in appetite as the global interest-rate hike cycle comes to an end.
A 1,301-square foot unit at Azura on 2A Seymour Road changed hands at HK$37 million (US$4.73 million) last week, according to people familiar with the matter. The property was valued at HK$45 million. A three-bedrooms unit at Alassio on 100 Caine Road was sold for HK$34.8 million, or about 20 per cent below its asking price.
Both properties are located at Mid-Levels West and developed by Swire Properties.
Foreclosed properties, those seized by banks due to missed mortgage repayments, have added to active transactions of luxury homes in recent months, said Peter Au, managing director at AA Property Auctioneers. A multi-year stock market slump and higher interest rates are the likely source of financial distress.
“Veteran investors in the property market are quick to act, and those who are cash-rich will come out to buy now, but the bargains have to be big,” he said. “There are more enquiries for these properties after the recent easing measures and the view that the rate-hike cycle has peaked.”
The Hong Kong Monetary Authority has lifted its base rate by 525 basis points in total since March 2022 in lockstep with the hikes by the Federal Reserve, while the city’s commercial banks raised their prime rate five times by a total of 87.5 basis points. An unprecedented slide in the Hang Seng Index has erased about US$2 trillion of equity wealth since early 2021.