There¡¯s a saying in Hong Kong property circles that if the city¡¯s richest man, Li Ka-Shing, is selling, you don¡¯t want to be the buyer. Now, a group of investors who paid $5.2 billion for Li¡¯s stake in The Center almost three years ago ¡ª making it the world¡¯s most expensive skyscraper ¡ª is finding out why. After initially making quick profits flipping floors in the 73-story tower, the combination of anti-government protests, the coronavirus pandemic and escalating U.S.-China tensions has seen vacancies surge, rents drop and deal-making dry up.
Just one sale has been made this year ¡ª at a 35 percent discount to early 2019 prices, according to property-data provider Real Capital Analytics. Almost one-fifth of the building is empty ¡ª one of the highest vacancy rates in Hong Kong¡¯s sought-after central business district ¡ª and rents are down about 20 percent from a year ago.
¡°It was a reasonable investment decision back then,¡± said Thomas Lam, an executive director at Knight Frank LLP. Market prices were higher than the average cost the group paid, and flipping floors seemed easy, he said. ¡°But now, as rental yields and office demand decline amid the worsening economy, buyers are much more reserved.¡±
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