HSBC, DBS Executives Buy Hong Kong Luxury Homes as Financing Improves

A pair of senior executives from HSBC and DBS have purchased luxury apartments in Hong Kong in a duo of high-end deals registered last week, just days after the Hong Kong government introduced measures making it easier to finance home buying.

HSBC Global Asset Management chief executive Nicolas Moreau purchased a unit at the Century Tower 1 block in the Mid-Levels for HK$50 million ($6.4 million), while Sebastian Paredes, CEO of the local unit of Singaporean lender DBS, paid HK$49.4 million for a top-floor flat at The Aster in Happy Valley, according to local news providers HK01 and Ming Pao.

The transactions were recorded less than two weeks after Hong Kong chief executive John Lee on 16 October unveiled fresh measures to bolster the city’s ailing residential property market in his latest policy address, including relaxing down payment requirements. The new policies, along with interest rate reductions by the US Federal Reserve and China’s recent stimulus measures, are helping to boost sentiment in the luxury segment, according to consultancy Cushman & Wakefield.

“The luxury residential market in Hong Kong is experiencing a positive shift, driven by improved market sentiment following the recent Fed’s interest rate cut, Chinese government’s stimulus measures, and the subsequent recovery in the stock markets,” Rosanna Tang, Cushman & Wakefield’s head of research and business development services for Hong Kong told Mingtiandi. “Additionally, in the latest policy address, the government’s relaxation on the LTV ratio will also help lower the entry cost requirements for residential assets, particularly for big-ticket sales, benefiting the overall luxury residential segment in the long term.”

Bankers Go Condo Shopping

Moreau, who was among four senior executives who relocated from HSBC’s London headquarters to Hong Kong in 2021 under the directive of then CEO Noel Quinn, paid HK$24,498 per square foot to acquire a 2,041 square foot (190 square metre), three-bedroom unit in Century Tower 1. The transaction marks the lowest price paid for a unit in the building since 2017, according to data from local agency Midland Realty.

The seller, who purchased the flat for HK$14.8 million in 1999, had put the property up for sale for HK$56 million before agreeing to sell the property to Moreau for HK$50 million, according to local media accounts.

Over in Happy Valley, Paredes paid HK$39,549 per square foot for a 1,249 square foot, three-bedroom flat on the 31st floor of the Kerry Properties project at 7A Shan Kwong Road.

The purchase of the top floor unit by Paredes, who oversees DBS’ mainland China, Hong Kong and Taiwan operations as head of North Asia, in addition to serving as CEO of DBS Bank (Hong Kong) Ltd and chairman of DBS (China) Ltd, reportedly set a record for the highest transaction value as well as highest price per square foot in the project since its launch last year.

Cautious Outlook

The purchases by Moreau and Paredes come after a recent uptick in distressed sales in Hong Kong’s luxury residential market, with transactions in the three months through 31 July taking place at nearly half of their valuations just a few years earlier, according to an August report by Savills.

“The high-end residential sector has been experiencing significant upheaval, with distressed sales dominating the ultra-luxury property market, especially in the prestigious Peak area,” Savills said. “These transactions have seen dramatic price reductions, averaging 46 percent below their Covid-era valuations, which has finally enticed opportunistic buyers into the market. This sharp decline in prices has been largely attributed to several instances of distressed sales, where property owners were compelled to sell to settle outstanding debts.”

JLL adopted a cautious near-term outlook on the luxury market, with the consultancy indicating that would-be cash-rich buyers have largely already entered the market following the relaxation of cooling measures in February, which included the removal of all stamp duties on residential property transactions.

“We remain bearish for the rest of the year and believe the market would need more time to react to the rate cut because the pent-up demand has been digested quite a lot following the removal of cooling measures,” JLL said in an August report. “Cash-rich buyers, who are less sensitive to the interest rate, have already entered the market. Thus, a repeat of this elevated level of market activity appears unlikely.”

In the week immediately following last month’s 50 basis point base rate reduction by the Hong Kong Monetary Authority, the primary market recorded 94 transactions, representing just 10.2 percent of the 918 transactions seen in the first week after the relaxation of cooling measures, according to the consultancy.