Li Ka-shing, senior advisor of CK Asset Holdings Limited and CK Hutchison Holdings.
CK Asset Holdings, the flagship property company of Hong Kong’s richest person Li Ka-shing, said on Thursday it had terminated a HK$20.8 billion ($2.7 billion) sale of a luxury residential project to a Singapore private wealth manager after the buyer failed to make its first payment.
ORIC-Borrett, a fund owned by Sino Suisse Capital, had forfeited a deposit of HK$2.1 billion, equivalent to 10% of the deal, CK Asset said in a filing to the Hong Kong stock exchange. It came after Sino Suisse failed to make the first part payment of roughly HK$1 billion and the accrued interest, according to CK Asset.
“Despite both parties’ attempts to address the default through discussion on a without prejudice basis, the market has continued to change and interest rates have fluctuated after the sale and purchase agreement,” Justin Chiu, executive director of CK Asset, said in a separate statement. “Unfortunately, we were unable to reach a resolution, so the Group had to execute the relevant contractual terms, which is regrettable.”
The termination of the deal would not have any material adverse impact on CK Asset’s business and financial position, the company said. CK Asset will put up the residential project for sale again based on the current market conditions, said Chiu.
CK Asset’s 21 Borrett Road residential development in Hong Kong’s Mid-Levels.
The deal involved a residential development in Hong Kong’s affluent Mid-Levels district that comprises 152 residential units, 242 residential car parking spaces and 31 motorcycle parking spaces. CK Asset would have gained a profit of HK$6.3 billion from the sale if it had gone through, according to a company filing when the property developer first made the announcement in September last year.
The terminated deal could weaken sentiment in Hong Kong’s luxury residential market and affect sale of other high-end projects by major developers, said Bloomberg Intelligence property analysts Patrick Wong and John Wong in a note. They added that CK Asset could struggle to find new buyers, even though the company will not be in a rush to sell the development due to its sizable net cash and the forfeited deposit.
Despite the border reopening with mainland China, Hong Kong’s property market has remained in the doldrums due to high interest rates and bearish stock market performance. The Asian financial hub saw its residential transactions fall 25.1% year-on-year to 3,613 in June, according to government data. The figure marked the lowest level since Hong Kong resumed normal travel with mainland China in early February.
Sino Suisse is headed by Albert Liu, a former managing director at UBS’s Singapore branch overseeing ultra-high-net-worth client management for China. The Singapore-based firm has previously said it had more than $3 billion in assets under management.