Bargain sale, collapsed deal reflect Hong Kong’s struggling retail property market

Foreclosure auctions and cancelled shop deals in Hong Kong's Lan Kwai Fong and North Point areas highlight the struggling retail property market, reflecting weak consumer spending, according to analysts. The Lan Kwai Fong property, once home to Insomnia, sold for 60% less than its 2015 value, while a North Point shop deal fell through after two months.

Analyst Edwin Lee, CEO of Bridgeway Prime Shop Fund Management, attributed the market struggles to banks' reluctance to lend, requiring large-scale commercial real estate transactions to be paid in cash. The Lan Kwai Fong property, valued at HK$58.68 million, saw a 60% price drop from its 2015 purchase price of HK$168 million. Despite the slump, its location remains valuable, with a competitive monthly rent of over HK$200,000, providing a projected yield of over 4%.

Meanwhile, a North Point shop deal also fell through with the transaction amounting to HK$48.8 million, later cancelled. The property, owned by Tin Yick Hong Realty, had been leased to a Korean eatery at HK$150,000 monthly.