The economic downturn in Hong Kong has turned the world’s most expensive skyscraper into a headache for its owners.
In 2017, a group of buyers paid $5.2 billion for Li Ka-shing’s 75 percent stake in The Center, Hong Kong’s fifth-tallest tower. While the consortium was initially able to flip floors for quick profits, it has struggled to close deals since mid-2019, when protests against mainland China started in the territory, according to Bloomberg.
Now, about 20 percent of the building is unoccupied and asking rents have dropped by 20 percent. Only one property has sold in the building so far this year, and it was deeply discounted from early 2019 prices, according to Bloomberg. Around 20 percent of the building is empty and rents are down 20 percent from the same time last year.
“It was a reasonable investment decision back then,” said Knight Frank’s Thomas Lam. “But now, as rental yields and office demand decline amid the worsening economy, buyers are much more reserved.”
Economic tension between the U.S. and China and the coronavirus pandemic have led to uncertainty in the Hong Kong market, with nearly every property type seeing prices fall. Earlier this month, the U.S. government sold an apartment complex in one of Hong Kong’s most expensive neighborhoods for roughly $7,000 per square foot — a steep discount.
Office vacancies are also at a 16-year high. Valuations may fall by as much 20 percent this year, according to Jones Lang LaSalle. [Bloomberg] — Dennis Lynch