Luxury Apartment Worth 20 Billion Soared Sky-High... Suddenly Dropped 40% and Barely Sold

Hong Kong Residential Real Estate Plummets
"Chinese Economic Downturn Cited as Cause"

A contract in Hong Kong, which once boasted the most expensive housing prices in the world, has appeared with a staggering 35% drop compared to the previous transaction.

[Photo by Pixabay]

On the 12th, the South China Morning Post (SCMP) reported that a Chinese businessman purchased a luxury apartment in the Mid-Levels area, a wealthy district in Hong Kong, for HKD 65 million (approximately 11.7 billion KRW), reflecting the current mood of Hong Kong real estate. This property was listed last year at about HKD 110 million (approximately 19.9 billion KRW), but as it did not sell, the price was steadily reduced and was finally sold at a price 41% lower than the initial asking price. The successful buyer, who managed to 'pick up a bargain,' is known to be An Zhifu (安治富), the CEO of an automobile-related business in Sichuan Province, China, with a scale of 20 billion yuan (approximately 3 trillion KRW).

A local Hong Kong real estate agent told SCMP, "We have witnessed mainland Chinese owners of luxury homes in Hong Kong attempting to sell for various reasons over the past two years," adding, "At the same time, most recent buyers of high-priced Hong Kong real estate are also from the mainland."

Recently, The New York Times (NYT) also focused on the plummeting Hong Kong real estate market. "From builders to wealthy speculators, many who contributed to the inequality in Hong Kong's housing market are now forced to sell their precious homes," it analyzed, "They accumulated wealth through the mysterious rise of the Chinese real estate market, but have become cash-strapped due to the aftermath of its collapse." The biggest cause is the economic downturn in mainland China, which is closely linked economically. Joseph Tang, chairman of Hong Kong real estate company Jones Lang LaSalle (JLL), said, "(At this point) the only real estate available for sale is residential property. If prices are lowered enough, buyers may appear."

To support the collapsing housing prices, the Hong Kong government has increased loan limits for both residential and non-residential properties, and six financial institutions in Hong Kong have lowered loan interest rates twice this year. Lucia Leung, director at global real estate firm Knight Frank, analyzed, "Investor interest in distressed properties is growing recently," adding, "While luxury home prices may not fall significantly, distressed properties can see price drops of up to 50%."

The decline in Hong Kong housing prices began in 2022. That year alone saw a 15.6% drop, and this trend has continued to the present. This is the first time Hong Kong housing prices have fallen since the 2008 global financial crisis. Until now, Hong Kong has maintained some of the highest housing prices in the world due to its limited land and high population density. According to a 2020 survey by the U.S. think tank Urban Reform Institute and Canada's public policy Frontier Centre, which examined housing affordability in 92 major cities worldwide, the median Hong Kong property price was 20.7 times the median household income, the highest among them. This means it would take more than 20 years of saving the entire income to buy a home.