Creditors Close in on Sale of Evergrande Founder’s Seized $112M Hong Kong Mansion

Evergrande boss Xu Jiayin still holds the reins of what was once China’s biggest builder, but his pile of assets is getting whittled down with an HK$880 million ($112.1 million) mansion formerly held by the developer said to be nearing a sale.

Agents CBRE and Centaline Property, which have been appointed to jointly market the villa on Hong Kong’s Peak on behalf of receivers, issued a statement on Thursday saying they expected a tender for the home to result in a sale within this month, as changing conditions rekindle market demand.

“Thanks to the reopening of borders between China and Hong Kong, the economy is gradually returning to normal,” Reeves Yan, executive director and head of capital markets for CBRE Hong Kong, said in the Chinese-language statement. “The luxury real estate market is also expected to recover as US interest rates look close to reaching a peak.”

Receivers appointed by China Construction Bank (CCB) Asia seized the 5,171 square foot (480 square metre) home on 1 November after Xu had begun pledging personal assets to satisfy creditors seeking payment on the company’s debts.

Luxury Rebounds

Local news reports indicate that buyer demand for House B at 10 Black’s Link boosted the expected selling price to around HK$880 million, from an estimated HK$700 million when it was taken over last year.

That updated expectation for the property, which is reported to have been used as Xu’s family residence, prices it at HK$170,180 per square foot.

Eric Lee, a senior regional sales director at Centaline, traces the strong reception to the tender to improving sentiment amid an anticipated rebound in Hong Kong’s luxury housing market.

“This mansion occupies a rare independent lot, and is located in a community traditionally favoured by well-known families, which has helped to propel market interest,” Lee said in the statement. “Luxury home buyers have regained confidence in the market. The wait-and-see atmosphere has dissipated and luxury home transactions are heating up.”

Hong Kong saw 96 transactions involving new and secondhand homes worth over HK$50 million in the first two months of 2023, with landed villas accounting for 14 of these purchases, according to Centaline.

CBRE and Centaline said about 60 percent of the enquiries for the property came from wealthy local individuals and families, with another 30 percent coming from mainland parties. The property is sold on an as-is basis, with a winning buyer to be selected in late March.

Debt and Doom

Land Registry documents and reports from local media reveal that private local entity Atos Co Ltd mortgaged the home overlooking Hong Kong’s Deep Water Bay to CCB Asia in October 2021 in exchange for a HK$300 million loan, with Xu listed at the time as the sole director of Atos.

House B is one of a set of three villas at the 10 Black’s Link development once owned by Evergrande-linked entities, with the two other properties, Houses C and E, pledged to Japanese financial services firm Orix Asia Capital Ltd in November 2021, according to government records. A Bloomberg account at the time said the two homes served as collateral for a HK$821 million loan.

Should the Peak mansion sell, it would represent the latest example of an Evergrande trophy asset being liquidated by creditors, as the Guangdong-based developer struggles to pay off debts previously estimated at $300 billion.

Evergrande’s Hong Kong headquarters in Wan Chai district has been on the market since last September after creditors, reportedly led by China CITIC Bank International, had seized the 26-storey office tower earlier last year.

Also in September, Evergrande suffered a court-arranged sale of its 14 percent share in Shenyang’s Shengjing Bank to a group of seven mainland firms for RMB 7.3 billion (then $1.1 billion), after it lost an arbitration case brought by creditors.

The troubled builder is currently struggling to reach an agreement with offshore bond holders before it faces a winding-up hearing in a Hong Kong court on 20 March, according to Bloomberg.