Less than 10 days after agreeing to purchase a luxury home in southern Hong Kong island for HK$251 million ($32 million), an unnamed buyer has walked away from the deal, forfeiting a HK$12.56 million deposit, according to Hong Kong public records.
The anonymous buyer had agreed on June 11 to purchase a ninth floor unit at 8 Deep Water Bay Drive, a luxury development by Nan Fung Group, but abandoned the contract, and his or her deposit, as commercial and social uncertainty have combined to slow transactions in Hong Kong’s property market.
May Was Sunny, But June Turns Cloudy
“Through the end of May, the luxury housing market had posted solid gains this year with prices in representative properties we track up around 10 percent year to date,” Reed Hatcher, head of research at Cushman & Wakefield Hong Kong, told Mingtiandi.
But June seems to have changed the outlook for some buyers.
“We’ve seen the growth stall in the past month or so as issues like the trade war and Hong Kong’s protests over the extradition bill have injected some uncertainty in the market,” Hatcher added.
On Hong Kong island’s south side, the unnamed buyer had originally signed up to buy the 3,641 square foot home at the 52-unit 8 Deep Water Bay Drive for the equivalent of HK$69,000 per square foot. However, public records showed there has been no further progress made towards the closing of the deal in the exclusive area overlooking the South China Sea before the buyer finally aborted the purchase and forfeited their five percent deposit.
Nan Fung Project Serves Hong Kong’s Elite and Alibaba Founders
Located south of Shouson Hill, 8 Deep Water Bay Drive is surrounded by the green slopes of Pok Fu Lam, Aberdeen and Lung Fu Shan country parks, offering Hong Kong’s elite a refuge from the concrete reality faced by more typical denizens.
The location on Deep Water Bay Drive would put residents on the same street as Hong Kong’s richest man, Li Ka-shing, and a pair of Alibaba co-founders spent HK$560 million to buy a pair of apartments in the same development in November last year.
The project’s 52 units include three or four en-suite bedroom apartments ranging from 2,865 square feet to 4,214 square feet, complemented by such facilities as a gym, indoor and outdoor pools, a 22,000 square foot garden, jacuzzi, playground and a lounge.
In April, a 7,568 square foot unit with a 2,983 square foot garden at 8 Deep Water Bay Drive was sold for HK$605 million, which translated to HK$80,000 per square foot, setting a new record for condominiums in Hong Kong, according to the local media.
A daughter of late Hong Kong billionaire and New World Development founder, Cheng Yu-tung, is also said to have bought a seventh-floor unit in each of the two towers in the development in February for HK$228 million and HK$292 million respectively, equivalent to HK$62,800 and HK$69,200 per square foot.
Luxury Market Not Finished Yet
While Nan Fung will now have to find a new buyer for its apartment on Deep Water Bay Drive, Hong Kong seems to still have some Bentley drivers and Cartier clutchers shopping for new homes.
“At this point, the market is being pulled in two directions,” said Hatcher. On the positive side, there is still strong underlying demand along with an expectation of rate cuts supporting the market. On the other hand, negative factors like the trade war and local political issues are weighing on the market. “As result, we expect a temporary drop in sales over the near term, especially in the secondary market, as buyers take a wait-and-see approach, though prices are expected to remain largely flat,” Hatcher said.
Earlier this week, a 5C unit and a 5D unit at the third phase of Mount Nicholson, which was jointly developed by Wheelock & Company and Nan Fung Group on Hong Kong’s Victoria Peak, were sold for a total of HK$870 million. The HK$99,000 per square foot price for the apartments, which were sold as a pair, was 9.7 percent higher than house No 16 at Mount Nicolson fetched when it sold for HK$720 million ($91.73 million) in May this year, after an earlier buyer had forfeited a HK$36 million deposit on that property.