Covid, protests batter Hong Kong’s realty market

Hong Kong, Aug. 7: Some Hong Kong foreclosed homes have been recently sold at steep discounts, adding to signs that the world’s most expensive housing market could be heading for price declines both this year and next.

With the economy hit by anti-government protests and the coronavirus pandemic, foreclosures in the Asian financial hub jumped 54 per cent in the first seven months of the year to 675, according to property auctioneer Century 21 Surveyors.

Both speculative investors and ordinary people are walking away from their mortgages, financing companies and auctioneers said. Some warn foreclosures could surge next year to their highest levels since the global financial crisis.

Unlike Hong Kong’s commercial property market which has seen a 30 per cent drop in building values in the past year, home prices have so far been relatively resilient due to strong demand, even edging up 1.8 per cent in the first half of this year.

But two foreclosed properties belonging to a mainland Chinese investor recently sold at discounts of 25 per cent and 12 per cent to their respective purchase prices of around HK$30 million ($3.9 million) and HK$20 million, according to a person with direct knowledge of the matter. The person declined to be identified discussing client matters.

Henry Choi, a director at

Century 21 Surveyors, also said his company has had three recent cases where banks put auctions on hold after deciding to go back to court to ask for a lower base price.

“The original valuations were too optimistic and they would be hard to sell now in this market,” he said.

With demand far outstripping supply, prices for Hong Kong private homes have surged more than six times since 2003. There has only been one year of annual decline in that period — a drop of 3.6 per cent in 2016.

Some analysts, however, expect current economic stresses will soon hit the market harder and predict a fall of roughly five per cent this year to be followed by a bigger drop next year.

Industry sources also note foreclosures last month were artificially low as courts have been processing cases very slowly for several weeks due to social distancing measures imposed after new outbreaks of the virus.

Mahindra and Mahindra, India’s auto major on Friday saw its quarterly profit nearly wipe out as the Covid-19 pandemic hit the supply chain.

India’s biggest tractor maker’s net profit fell 97 per cent year-on-year to `68 crore in the June quarter, according to an exchange filing. M&M results include the financials of Mahindra Vehicle Manufacturers.

The company had seen a `3,255-crore loss in preceding three-month period because of a one-time impairment.

Mahindra’s revenue fell 56.4 per cent over the year ago to `5.589 crore in the April-June period, compared with the `5,567crore forecast, dragged by a low inventory pipeline and challenges in reviving production amid mounting coronavirus cases.

The company’s earnings before interest, tax, depreciation and amortisation declined 67.9 per cent to `575.7 crore, while Ebitda margin contracted to 10.3 per cent from 14 per cent.

Mahindra’s passenger vehicles sales fell 78 per cent year-on-year during the quarter compared with an 81.5 per cent drop seen across the industry.

The company in June, however, recorded the second-highest tractor sales it has ever seen, aided by rural demand.

Mahindra’s tractor sales for the quarter fell 22 per cent year-on-year.