$64M Hong Kong Mansion Marketed by Receivers as Evergrande Liquidation Continues

A second Hong Kong mansion linked to China Evergrande Group’s fallen chairman Xu Jiayin has been put up for sale after being seized by receivers, as creditors liquidate assets in the wind-up of what was once China’s largest developer.

Receivers have appointed Savills to manage a tender for House E at 10 Black’s Link, according to a release from the property brokerage firm on Thursday. Market sources estimate the property in Hong Kong Island’s prestigious Peak area to be worth between HK$500 million to HK$550 million ($64 million to $70 million).

“The property enjoys an excellent location, adjacent to well-known celebrities and notable families in the city,” said Raymond Wan, chief senior director of investment at Savills Hong Kong. “This property for sale is the relatively new single lot house on Black’s Link and has never been publicly available on the market before, making it extremely rare. Additionally, luxury property prices have adjusted significantly from their peak, resulting in a decrease in transaction cost.”

Part of a trio of adjacent luxury homes seized by creditors following Evergrande’s default in 2021, the mansion is going on the market a month after Hong Kong’s High Court ordered the wind-up of the company as it struggles with $329 billion in debts.

Asset Seizures

House E and neighbouring House C were taken over by receivers appointed by Orix Asia Capital in November, with the two properties said to have a collective value of HK$1.5 billion ($192 million) when Xu pledged the assets to the Japanese financial services firm as collateral for a HK$821 million loan in 2021. The pair of homes is now estimated by market sources to be worth a total of HK$1 billion.

House B, the third property in the portfolio, was seized by China Construction Bank (CCB) Asia in November 2022 and put up for sale in March 2023 at an asking price of HK$880 million. That home, which had been pledged to CCB Asia in 2021 in exchange for a HK$300 million loan, has yet to find a buyer.

All three properties are held by entities linked to Xu, according to regulatory filings.

Located a 15-minute drive to Hong Kong’s Central district near the junction of Wong Nai Chung Gap Road and Repulse Bay Road, the three-storey House E has a saleable area of 4,933 square feet (458 square metres) and features an internal elevator, private garden, and views of Deep Water Bay and Repulse Bay.

The property is being sold on an “as is” basis, with the tender tentatively set to conclude at noon on 22 April.

In addition to Hui’s personal assets, creditors have also seized properties belonging to Evergrande, with China CITIC Bank International having taken over the company’s Hong Kong headquarters in Wan Chai district in 2022, which it later put on the market for HK$9 billion. No sale has yet been recorded for the 26-storey office tower on Gloucester Road, which is now called YF Life Centre.

Xu, who also goes by his Cantonese name Hui Ka Yan, was reported to have been taken into custody by mainland authorities in September 2023 and is said to be suspected of  “illegal crimes.”

Signs of Life

Xu’s Peak mansion is going on the block as Hong Kong’s luxury property market shows signs of activity after prices of super luxury residences slid 25 to 30 percent over the past 18 months, according to a November 2023 report by Savills, which defines super luxury as exceeding HK$200 million in price.

“Despite the high interest rate environment in 2023, the luxury property market has remained stable,” said Raymond Lee, chief executive of Greater China at Savills. “Properties on the Peak and Southern District have been highly sought after by buyers. In the first month of 2024, the luxury property market has already recorded over five transactions exceeding HK$100 million.”

In January, an entity linked to the wife of Xu Hang, the mainland billionaire co-founder of Shenzhen-listed medical device maker Mindray Medical, acquired a 12-bedroom mansion at 25-26 A&B Lugard Road at the Peak for HK$838 million ($107 million).

Savills is initiating the tender two days after Hong Kong’s government rolled back all taxes on residential property transactions as part of its 2024 budget plan, with potential buyers set to benefit from the removal of the buyer’s stamp duty imposed on non-permanent resident purchasers and the new residential stamp duty levied on second home purchasers.

“As part of the recent 2023-24 Budget announcement, stamp duties have been removed,” said Lee. “This significant reduction in stamp duty rates translates to potential savings of tens of millions of dollars for super luxury properties. It is anticipated that this policy change will attract a larger number of domestic investors.”

Hong Kong’s policy changes introduced this week also include lower down payment requirements for some categories of homes, including top end housing, with analysts seeing the move as potential stoking demand for villas like the former Evergrande properties.

“The demand for luxury assets should be boosted as the loan-to-value ratio has been relaxed to 60 percent for those home properties exceeding HK$35 million,” Vincent Cheung, managing director with Vincorn Consulting and Appraisal told Mingtiandi.