Hong Kong luxury property owners turn to high-interest private loans for relief from liquidity pain
- Cash-strapped owners are taking out loans with rates of up to 29 per cent, with luxury properties in areas like The Peak and Repulse Bay as collateral
- Asia-Pacific private credit market has grown 3.5 times larger in a decade and is expected to top US$100 billion by 2027, says data provider Preqin
On a road that winds through Hong Kong’s posh Repulse Bay neighbourhood, a multistorey luxury residential building with Roman columns and sweeping views of the South China Sea has been put forward as collateral for a loan, before construction is even finished.
The loan was taken out by Luk Sin-fong, who owns 39 South Bay Road and whose husband is Chen Zhoulin, chairman of distressed Chinese developer Agile Group Holdings, according to a source familiar with the matter.
Although the amount is unknown, Luk, herself a former vice-chairwoman of Agile, had been shopping for a HK$500 million (US$64 million) facility, according to the source.
That amount matches what she paid for the Repulse Bay land plot in 2011 at what was then the second-highest price per square foot ever paid in the city, HK$38,500 (US$4,900).
Agile, based in the Guangdong’s provincial city of Guangzhou, has borrowed against more than one Hong Kong property.
It took out a two-year, HK$894 million loan in June 2022 at an interest rate of 20 per cent per annum as part of a plan to trim a debt load that amounted to 59.49 billion yuan (US$8.3 billion) at the time.