Property tycoons are eager for bigger and faster US rate cuts to facilitate refinancing and avoid fire sales, says Shuli Ren for Bloomberg Opinion.
Hong Kong 's entire real estate market suffers from negative carry, in that the rent an owner can expect to collect is nowhere close to paying for financing costs. HONG KONG : Among those looking forward to the US Federal Reserve’s interest rate cuts, few are as anxious as Hong Kong ’s property tycoons who are now dealing with sluggish home sales, empty office buildings, and mutinous tenants demanding lease renegotiations.
New World, one of Hong Kong’s most indebted developers, paid HK$2.5 billion in financing costs in the second-half of 2023, eroding 44 per cent of the firm’s operating profit. The collateral, consisting of two floors at The Center, could sustain only a HK$700 million deal, Debtwire reported in May. The amount they can borrow may be even lower now. Office vacancy rates have soared to 15 per cent in Central, up from just 2 per cent in 2017, when Li notched the record deal.
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