HK$448 Million Sale of Evergrande Chairman's Mansion

Explore the dramatic downfall of China Evergrande and the sale of the chairman's mansion in Hong Kong at a steep discount.

Published June 15, 2024 - 00:06am

5 minutes read
China
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A mansion in Hong Kong, formerly owned by the chairman of China Evergrande Group, was sold last month for HK$448 million (S$77.6 million), half its 2023 valuation, according to Land Registry records.

The 465 sq m property, situated in a premium residential development on the Peak, was seized by China Construction Bank (Asia) from Evergrande Chairman Hui Ka Yan in November 2022. Records show the buyer is Sassicaia Company, though the ownership of this company remains unclear.

Receivers initially put the mansion up for sale in March last year, valuing it at HK$880 million, sales agents disclosed at the time. Two other mansions owned by Hui on the Peak, both with panoramic views of Hong Kong's skyline, have also been seized by creditors.

One of these properties, valued at HK$500 million, was offered for sale by tender earlier this year but failed to attract buyers, said a source familiar with the tender process, who declined to be named.

Evergrande, once a titan in the property development industry, is now the world's most indebted property developer with liabilities exceeding US$300 billion. The company defaulted on its offshore debt in late 2021, leading to a Hong Kong court ordering its liquidation earlier this year. All of Evergrande's real estate assets in Hong Kong have either been seized or sold, while the chairman's personal assets remain outside the liquidation proceedings.

A mansion in Hong Kong, formerly owned by the chairman of China Evergrande Group, was sold last month for HK$448 million (S$77.6 million), half its 2023 valuation, according to Land Registry records.

The 465 sq m property, situated in a premium residential development on the Peak, was seized by China Construction Bank (Asia) from Evergrande Chairman Hui Ka Yan in November 2022. Records show the buyer is Sassicaia Company, though the ownership of this company remains unclear.

Receivers initially put the mansion up for sale in March last year, valuing it at HK$880 million, sales agents disclosed at the time. Two other mansions owned by Hui on the Peak, both with panoramic views of Hong Kong's skyline, have also been seized by creditors.

One of these properties, valued at HK$500 million, was offered for sale by tender earlier this year but failed to attract buyers, said a source familiar with the tender process, who declined to be named.

Evergrande, once a titan in the property development industry, is now the world's most indebted property developer with liabilities exceeding US$300 billion. The company defaulted on its offshore debt in late 2021, leading to a Hong Kong court ordering its liquidation earlier this year. All of Evergrande's real estate assets in Hong Kong have either been seized or sold, while the chairman's personal assets remain outside the liquidation proceedings.

The decline of Evergrande has sent shockwaves through the real estate market, not just in Hong Kong but globally. With its vast portfolio of projects, the company's downfall has had a domino effect on numerous suppliers, contractors, and prospective homeowners. The sell-off of its properties, including the mansions on the Peak, is a stark illustration of the financial desperation facing the company as it attempts to offload assets to cover its enormous debt.

The luxurious properties on the Peak are among the most coveted in Hong Kong, known for their exclusivity and breathtaking views. Such steep price cuts underscore the urgency of the situation, as creditors scramble to recoup their losses. The dramatic fall in property value exemplifies the loss of confidence in assets associated with Evergrande.

Analysts point out that Evergrande's crisis could have a cooling effect on the real estate market in Hong Kong and across China. The company's aggressive borrowing and rapid expansion have long been seen as indicative of broader issues within the Chinese property sector. Now, with Evergrande's predicament, there are growing concerns about the stability of other property developers who followed similar strategies.

The sale of Hui Ka Yan's mansion for half of its previous valuation also highlights the personal toll the company's crisis has taken on its chairman. Once celebrated as one of China's richest men, Hui's personal fortunes have plummeted in line with the company's downfall. Despite his significant personal wealth, Hui has been increasingly isolated from Evergrande's financial debacle; however, it remains to be seen how much longer he can maintain this separation.

The financial community is closely watching the aftermath of Evergrande's liquidation, as it may offer significant lessons about the limits of leverage and the risks associated with aggressive expansion. Investors, both domestic and international, are bracing for possible ripple effects that might extend to other sectors of the economy.

Moreover, the government's approach to handling the fallout from Evergrande will be a critical factor in shaping future policies. Beijing has already taken steps to tighten regulations on property developers, aiming to curb excessive borrowing and ensure more sustainable development practices. The results of these measures will likely determine the future landscape of China's real estate market.

For now, the sale of properties like the Hong Kong mansion will continue as creditors seek to recover as much of their investments as possible. The broader implications of Evergrande's collapse will unfold over time, shedding light on the vulnerabilities within the real estate sector and the broader economic ramifications for China and beyond.

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