Major Hong Kong developer’s default may derail residential market recovery
Posted on February 13, 2025 |
A major Hong Kong developer defaulted, putting the real estate sector and housing market recovery at risk.
New home sales in 2025 may reach only 10,000 units, half of the earlier forecast. Home prices could drop 5-7%, worse than last year’s prediction.
In 2024, developers built 24,261 new homes, the highest in 20 years, but sold only half, much lower than the 80% sell-through rate from 2014 to 2021.
The Hang Seng Index dropped the developer in November after it reported a record loss of HK$19.7 billion (US$2.53 billion).
By June 30, the company had HK$123.7 billion in net debt, with a 55% debt-to-equity ratio, one of the highest in the industry.
It owed HK$151.6 billion in loans and bonds.
The company refinanced 43% of HK$41.6 billion in bank loans due by June 2025, with a 5.3% interest rate.
