HK 'Shop King' struggles to sell billions in property bought during peak

New York

HONG Kong property tycoon Tang Shing-bor is seeking to offload billions of dollars of real estate after an ill-timed expansion at the top of the market.

Known as the "Shop King" for his vast holdings of retail property amassed over six decades, Mr Tang is among those hit as Hong Kong suffers through a deep recession triggered by civil unrest and the coronavirus pandemic.

With rental income evaporating, he's put a quarter of his family's real estate portfolio - valued at about HK$75 billion (S$13 billion) - up for sale this year, according to listings, news reports and filings tracked by Bloomberg.

That makes Mr Tang the city's most-active seller in a market that is at its lowest ebb in more than a decade.

It's a sharp change in fortunes for a man who splashed out more than US$1 billion on commercial real estate at the height of a boom three years ago, just as the city's richest man, Li Ka-shing, was inking the world's biggest office sale.

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Mr Tang's son, Stan, who runs the family's real estate business, said the clan has been offloading non-core assets over the past few years, and the recent sales aren't due to a liquidity crunch as reported by local media.

Stan Group (Holdings) Ltd, the company Stan uses to manage the family's assets, disputed the amount of property it's trying to unload but declined to offer specific figures, citing confidentiality issues. "When we have the need for capital and see a good opportunity, we will sell according to the situation," he said. "Even though market sentiment is bad, property valuations haven't decreased drastically."

Recent deals show the family has had to offer hefty discounts. The Tangs sold a plot of residential land last month for HK$351 million, well below the HK$450 million it was estimated to be worth by Savills Plc, the agency handling the sale.

Another residential site fetched HK$347 million in November, 20 per cent less than the asking price, according to Lydia Poon, a director at Jones Lang LaSalle Inc.

"You can't sell at a good price these days," said Alex Leung, a senior director at CHFT Advisory and Appraisal Ltd, a real estate consultancy. "If the owner's financial ability allows, they would rather hold the properties because it's likely for them to sell at a loss now."

The Tangs have put more than HK$20 billion of real estate up for sale this year, according to property listings, news reports and filings tracked by Bloomberg. Data provider Real Capital Analytics said they've managed to offload just US$232 million.

Despite having vast holdings of retail property, the family hasn't been able to make any significant sales from the portfolio in the past few months, according to Mr Stan Tang.

Across Hong Kong, US$5.3 billion in commercial property deals were signed in the first three quarters of 2020, the lowest amount since at least 2009, when RCA started tracking transactions. These days, when a deal is struck, it's usually at a steep discount as rents have plunged. In Causeway Bay, a popular shopping district, they sank 41 per cent in the first nine months, data from Cushman & Wakefield Plc show.

"Many investors are not active in hunting for properties," said Stanley Poon, an executive director at Centaline Commercial. "The commercial market is quite weak."

The setbacks for the Tangs come after an aggressive spending spree. In 2017, they purchased more than US$1.2 billion of commercial property, according to RCA. That year, office prices in prime business districts surged 20 per cent, Savills data show, and Mr Li's CK Asset Holdings Ltd. sold its stake in The Center for a record US$5.2 billion.

But now, after months of civil unrest and the imposition of a controversial national security law by China, foreign companies view Hong Kong as a less attractive destination to work, live and invest in.

The pandemic, travel restrictions and social-distancing requirements have shut businesses from retailers to bars and restaurants, suppressing demand for real estate.

Mr Stan Tang said he remains confident in the city's property market. The family has more deals coming up in the next couple of months, he added. Cushman & Wakefield forecast in a report on Wednesday that commercial property transactions next year will exceed those completed in 2019 as the economy begins to recover.

"In view of the low interest-rate environment, removal of the double stamp duty on non-residential property as well as the latest Covid-19 vaccine success, we are optimistic," he said. BLOOMBERG