Hong Kong Investor Selling Down $1.9B Property Portfolio as Commercial Slump Drags On

A Hong Kong investor who once estimated his direct property holdings at HK$15 billion (US$1.9 billion) has put his HK$460 million oceanfront mansion on the block and is marketing a pair of commercial assets in Causeway Bay and Central together worth an estimated HK$600 million, as property owners in Asia’s wealthiest city continue to show signs of stress.

Known colloquially as the “Ten Billion Shop King” for earning his fortune through street shop and retail property investments over the last three decades, Lai Wing-to has engaged brokers to manage the sale of 512 Jaffe Road in Causeway Bay’s prime retail area, as well as a mixed-use building in Central district’s Soho nightlife area.

Lai, who is one of Hong Kong’s biggest individual property investors, is preparing to offload the assets as capital values of high street shops in the city plunged 34.9 percent from 2019 to 2023 and high street retail rents remain 70 percent below their 2014 historical peak, according to a report by consultancy JLL.

“The retail market has suffered a structural change since the pandemic,” said Vincent Cheung, managing director at Hong Kong-based Vincorn Consulting and Appraisal. “Malls are more focused on experience-oriented retail and it’s not favourable to standalone on-street shops. The retail property market is bottoming out after the pandemic and it seems a right moment for the investors to dispose of retail properties for other investments.”

The proposed asset sales come after Lai last year reversed a decade of acquisitions in London’s poshest retail areas with an agreement to sell a London retail building, with that £170 million deal failing to close.

Prime Locations

At the junction of Jaffe Road and Cannon Street in Causeway Bay, Lai has appointed Centaline to manage a tender for a four-storey retail building, with a bid submission deadline of 20 March. Located just metres from the Causeway Bay MTR station, the building has a gross floor area of around 4,400 square feet (409 square metres).

The property had a reported appraised value of HK$400 million as of the fourth quarter 2023, and is fully leased to mainland trust company Anxin Trust at a monthly rent of HK$600,000, according to local media reports.

Lai had reportedly purchased the property’s predecessor, the 18-storey Radiant Centre, in 2012 for HK$368 million and completed the new building on the site in 2020.

In addition to 512 Jaffe Road, Lai has appointed Savills to market 9-11 Staunton Street, a seven-storey mixed-use building in the Soho area popular with expats. The property is steps from the Mid-Levels escalator and is a 12-minute walk to the Central MTR station.

The property, which is reported to be 73 percent occupied, has a gross floor area of 5,742 square feet (533 square metres), with office space on the first floor and eight residential units that operate as student dormitories on the second through fifth floors. Lai has leased the lower floors to F&B establishments.

Lai, who bought the property in 2009 for a reported HK$71.8 million, had previously listed the property at HK$350 million, but has since lowered the asking price to HK$200 million ($25.6 million) in response to market conditions, according to local media accounts.

London Splurges

Lai has put the Causeway Bay and Soho properties on the block after the veteran investor last year kicked off a series of asset sales as stagnant retail sales and a stalled tourism market dented cashflow.

In July 2023, Lai agreed to offload Standbrook House, a 23,265 square-foot retail property at 2-5 Old Bond Street in London’s Mayfair area, to watchmaker Richard Mille for £170 million. Lai had purchased the building, which houses flagship stores for the Swiss watch brand as well as for luxury apparel brand Tod’s, in 2018 for £152.5 million as the crown jewel in his London retail portfolio.

After entering the London market in 2010 with his £38 million acquisition of an Oxford Street retail building, Lai revealed to Hong Kong media last year that properties in the British capital accounted for 30 percent of his investment portfolio, with the investor having spent hundreds of millions of pounds snapping up shops in the Soho and Mayfair areas in the decade leading up to the pandemic.

Back home, Lai put his mansion at 10A-10C Tai Tam Road in Hong Kong’s Southern district up for sale in October. The 8,792 square-foot residence, which Lai had purchased in 2019 for HK$350 million, now has a market value of HK$460 million, according to local media reports.

Earlier this month, Lai sold a ground floor shop in the Yau Kwong Building on Wan Chai district’s Hennessy Road for a reported HK$35 million, with that sale coming a few months after he offloaded 28 parking spaces at The Sun’s Group Centre in the same district for a reported HK$45.5 million.

Lai, who began investing in Hong Kong retail properties in 1991, told local media last year that the market value of his portfolio had fallen by about 30 percent from its peak due to the pandemic.

Hong Kong’s property market slump has also led the heirs of the late Tang Shing-bor, the city’s best-known “Shop King,” to put assets up for sale with the family shopping the seven-storey Camel Paint Centre commercial building in the Kwun Tong area for HK$1.1 billion, as well as several units in the adjacent Camel Paint Building for HK$500 million.