A Shenzhen tycoon’s trophy case may soon be stripped bare as receivers for the creditors of Cheung Kei Group chairman Chen Hongtian on Monday launched a tender for his former mansion on Hong Kong’s Victoria Peak.
Savills formally kicked off the sale process for the fully detached home today, with Thomas See, a senior associate director noting in an earlier announcement, “15 Gough Hill Road offers over 10,000 square feet of living and outdoor space each, and it boasts dual sea views of Deep Water Bay and Repulse Bay, which makes it stand out among other properties on The Peak.”
Chen, who in the past year has seen his company stripped of office buildings in London and Hong Kong, alongside the seizure of his personal properties, had made a splash in Hong Kong when he purchased the Gough Hill Road abode in 2016 for HK$2.1 billion ($269 million). He explained at the time that his existing HK$387 million apartment in the city’s posh Mid-Levels area was “a little bit too tiny” at 5,154 square feet, according to an account in the South China Morning Post.
That apartment at the Opus Hong Kong on the Peak’s Stubbs Road had been put for sale by receivers in May of this year in a tender set to end on 8 August. No update has been provided so far regarding that tender, with both properties having been seized in March of this year
The tender for Chen’s former Gough Hill Road property is set to close on 19 September, with Savills noting that it is one of just five residential projects on the street, of which only three are single lots. The home boasts unobstructed view of Hong Kong’s southern coastline, with a large swimming pool and two basement levels.
The appointed receivers for the property are David S. K. Au & Associates Limited with law firm Howse Williams advising on the sale.
A sales brochure for the 6-bedroom, 5-bathroom property shows a gross floor area of about 8,002 square feet, with the 18,460 square foot site approved for construction of up to 9,234 square feet of housing under current permitting, according to Alex Leung, a senior director with CHFT Advisory and Appraisal in Hong Kong.
After purchasing the three-storey home seven years ago, Chen received an occupancy permit in 2019, after undertaking some renovations. However, the sales brochure indicates that some areas of the home remain in an unfinished state.
Hope for a Luxury Revival
Raymond Wan, chief senior director of investment at Savills is optimistic regarding the tender, based on Hong Kong’s reopening late last year providing support for the luxury market.
“Since the border reopening, demand for properties on The Peak and in the Southside has risen significantly, with a series of transactions of luxury residential single lots, including 66 Deep Water Bay Road, which was sold for approximately HK$ 3.6 billion, and 5 Mount Cameron Road, which was sold for HK$ 1 billion,” Wan said in an announcement.
He also pointed to “rumours” that 30-38 Magazine Gap Road on the Peak had sold for HK$5 billion, although Mingtiandi was unable to substantiate those reports. The Magazine Gap Road site, which is permitted for development of up to 48,776 square feet of housing, had been on the market in 2019 for HK$6 billion.
After Chen paid the equivalent of HK$228,000 per square foot to purchase the home in 2016, with some analysts pegging this as the highest rate per unit area in the world, local media reports have estimated that the mansion may sell for HK$1.5 billion to HK$2.5 billion. However, not everyone is convinced of market demand for the top end home.
“The market for luxury houses is soft under the present conditions,” CHFT’s Leung said. “Most (luxury) homes transacted this year were in the region of 3,000 to 5,000 square feet of GFA. The large size of the subject house, approximately 9,200 square feet, makes it hard to have a buyer,” he added.
Leung estimates that the house is likely to attract offers closer to HK$1.2 billion to HK$1.3 billion, or around HK$135,000 per square foot.
The tender sale of 15 Gough Hill Road and Chen’s former apartment at the Opus Hong Kong show the personal side of a collapse seen from a corporate view through seizures of office blocks in London and Hong Kong.
Just one month after the start of the tender for Chen’s apartment in the Mid-Levels, receivers appointed by Cheung Kei Group creditors took over 20 Canada Square, an office tower on London’s Canary Wharf which Cheung Kei had acquired in mid-2017 for £410 million ($530 million).
In late May receivers had seized Cheung Kei’s 5 Churchill Place after the company had defaulted on loans backed by the Canary Wharf office tower. Cheung Kei had acquired the property in December 2017 for £270 million.
Also in May, receivers began marketing One HarbourGate East Tower, an office building which had been known as the Cheung Kei Center and served as the group’s Hong Kong headquarters until it was seized in March. Cheung Kei had acquired the 17-floor property for HK$4.5 billion (then $580 million) in 2016.