Seized HK mansion listed for US$112 million traces fall of Evergrande tycoon
PERCHED on the crest of a hill in a wealthy Hong Kong neighbourhood is a mansion for sale that was seized from China Evergrande Group’s chairman Hui Ka Yan.
The 5,000-square-foot house at 10B Black’s Link is one of three properties that companies linked to Hui bought in a six-house development in 2009 in the centre of Hong Kong island. The buildings formed Hui’s main residence when he was in Hong Kong, according to local media reports.
From this vantage point overlooking Victoria Harbour, Hui expanded a property empire that would make him one of the world’s richest people and fuel a real estate boom that would threaten the foundations of China’s prosperity.
Hui had founded Evergrande in 1996 in the nearby Chinese city of Guangzhou, but it was Hong Kong’s deep capital markets and access to international investors that supercharged the company’s growth.
Shenzhen-based Evergrande listed on the Hong Kong stock market the same year he bought the Black’s Link property and sold its first dollar bonds soon after. As the company’s profits grew, so did investor appetite – creating a cycle of gains.
Over the next decade the company’s shares surged as much as 800% to be among Asia’s hottest investments, while Chinese property junk debt – led by Evergrande – became one of the most profitable and popular corporate bond trades globally.
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Hui’s personal fortune swelled to US$42 billion at its peak in 2017. His majority holding in Evergrande meant he benefited generously from dividends – pocketing US$8 billion between 2011 and 2021, according to Bloomberg calculations. Although there was concern about the size of the company’s debt pile, Hui was able to rely on the financial support of his tycoon friends. These included Henry Cheng, chairman of New World Development, which built his Hong Kong home.
Then in 2020, Hui’s luck began to run out. President Xi Jinping’s crackdown on excessive leverage in the real estate industry slammed the housing market and triggered a plunge in Evergrande’s shares and bonds. This time there would be no reprieve. As the world’s most indebted developer headed toward a default that some worried would be China’s Lehman moment, Hui put all three houses up as collateral. House 10B was seized last year by China Construction Bank, and is on the market for US$112 million.
As more Chinese developers defaulted on their debt, other founders lost their Hong Kong trophy homes. Creditors this year seized two residential properties owned by Cheung Kei Group’s chairman, including a mansion, valued at US$271 million. A house linked to the CEO of Kaisa Group Holdings in the Residence Bel-Air development in Pokfulam was sold a year ago by receivers for US$38 million, a 14% discount to the 2017 purchase price.
Efforts earlier this year to sell Hui’s house on Black’s Link failed after bids fell short of the target. The interior of the European-style property has a muted design, with cream-coloured walls, marble flooring and floor-to-ceiling windows with views of nearby jungle-clad peaks and distant skyscrapers, according to a sales brochure obtained by Bloomberg News. There is also a private swimming pool. Centaline Property Agency and CBRE Group, the appointed agents handling the sale, declined requests to visit the house.
Hui, 64, is now worth US$1.9 billion, down 95% from the peak, and his future is uncertain. Evergrande, which defaulted in late 2021, is seeking to restructure its debt and faces hundreds of lawsuits worth US$73 billion. Its liabilities total US$328 billion. Over the weekend, Shenzhen police detained some staff members from its wealth unit in a sign the saga has entered a new phase involving the criminal justice system. BLOOMBERG
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