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The Hong Kong real estate market has recently seen a wave of large-scale property sales, and local veteran developer Kee Hui Group has been active in recent months. This newspaper has exclusively learned that the Kee Wai Group, owned by members of the Liu Chongxing family, has intensively sold off six core properties in the past three months, with a total market value approaching HK$5 billion. Among them, the most anticipated Wah Chui Beach Villa project in Chung Hom Kok, Stanley, set a record for the group's recent sales at a sky-high price of HK$2 billion.
The flagship project's valuation surged 9 times
According to our investigation, the Wah Chui Beach Villa located at 3-5 Hoi Horizon Drive, Chung Hom Kok has witnessed the history of real estate development in Hong Kong. The project covers an area of more than 100,000 square feet and includes 30 sea view units. The group began a 28-year ownership acquisition in 1988, with a total investment of approximately HK$200 million to complete the integration. It is now being sold for HK$2 billion, a nine-fold increase from the original cost. If calculated based on the 57,000 square feet of floor space that can be rebuilt, the price per square foot reaches HK$34,900. It is worth noting that the current annual rental return rate of the project is 11%, which can be increased to 14% after all units are rented out, making it a rare high-return luxury residential asset.
Asset restructuring under the pressure of debt reduction
In an exclusive interview with our newspaper, Tang Wenliang, CEO of Jihui Group, confirmed that the sale was mainly in response to banks' requirements to reduce loan ratios. "Everyone is currently tightening their debt reduction efforts, and we are adjusting our financial structure in line with the market." Tang stressed that many of the properties held by the group were acquired a long time ago and have seen significant book value appreciation, so cashing out at this stage is a reasonable financial arrangement. However, Tang remained tight-lipped about the group's specific debt levels.
Chung Hom Kok land valuation shrunk significantly
It is worth noting that the detached house site at No. 68-70 Chung Hom Kok Road in the same district was sold for HK$380 million, with a price of HK$35,200 per square foot, a 60% drop from the HK$88,000 per square foot price of the adjacent property of Canning Fok in 2021, reflecting a clear cooling of the luxury residential land market. Tang Wenliang explained in his column that the land was purchased for only 12.8 million yuan 30 years ago, and the long-term rental income has brought rich returns.
Strategic shift in the cold market
Analysts pointed out that the asset disposal plan launched by Jihui Group in November last year is quite indicative. In addition to residential projects, the sale list includes commercial properties such as the entire office floor of Shun Tak Centre in Sheung Wan (HK$663 million) and the entire hotel in Causeway Bay (HK$630 million), reflecting that the group is comprehensively shrinking its investment front. The head of DTZ's research department pointed out that with the current high interest rates in Hong Kong and the economic slowdown, developers generally adopt a "cash is king" strategy, and it is expected that this wave of asset disposals will continue until the first quarter of next year.
In-depth analysis
1. Historical cost advantage: Many of Jihui’s properties have been held for more than 30 years, and the original cost is extremely low. Cashing out now can achieve huge capital appreciation
2. Interest rate cycle pressure: Hong Kong's prime rate remains at a high level of 5.875%, and the financial costs of highly indebted companies rise sharply
3. Liquidity considerations: As commercial property vacancy rates rise, locking in profits in advance becomes a pragmatic option
4. Succession planning: The third generation of the Liao family gradually takes over, and asset disposal may involve the reconfiguration of family wealth
The market is concerned about whether the luxury residential area in Stanley can support high asking prices amid the shadow of the failure of the Cape Road government land tender. Industry insiders revealed that a mainland consortium has expressed interest in Huacui Villa, but the bid is conservatively kept at 1.5 billion yuan, and there is still a gap in price perception between buyers and sellers. As banks tighten credit at the end of the year, this debt reduction battle among real estate giants is bound to become a weather vane for the luxury housing market in the fourth quarter.
Further reading:
- Cheung Sha Wan Hoi Lok Court Home Ownership Selling Price HK$2.75 Million Sets a New Record Low
- 【Fanling Second-hand Market Conditions｜The owner of a two-bedroom apartment in Qingqing, which has lost 10% of its profit in two years, made a bold move and sold it for HK$4.2 million】
- A relative and friend hanged himself in a haunted house in Kwun Tong. After renovation, 24% was sold at a loss. The low price of 2.5 million attracted attention.
