Hongkongers are selling their homes at huge losses to flee the city as coronavirus weighs on economy

By Lam Ka-sing kasing.lam@scmp.com / https://www.scmp.com/business/article/3064763/hongkongers-are-selling-their-homes-huge-losses-flee-city-coronavirus?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | March 4, 2020 5:52 PM SGT
Homeowners are dumping their properties in Hong Kong for as much as HK$11.6 million (US$1.5 million) in losses to pack up their bags because of the city's dire economic prospects, analysts said. More could be pressured to sell into a weak market to hasten their emigration plans.
At Valais in Sheung Shui, a 1,588-square foot house changed hands at HK$21.3 million for a loss of HK$10 million in late January at the onset of the coronavirus outbreak, according to property agents who declined to be named because the transaction was private. Including taxes and expenses, the loss amounted to HK$11.6 million.
In another transaction, a 3,034-sq ft house with a 922-sq ft garden at Regalia Bay in Stanley was sold in mid-February for HK$67 million for a loss of about HK$5 million, they said.
ADVERTISEMENT
"The losses reflect the urgency or desperation among some of the city's homeowners, given the constant flow of bad news," said Martin Wong, a sales manager at Midland Realty. "Some of the home owners feel that the prospects are not good so they want to sell quickly, especially amid the current epidemic."
The coronavirus outbreak has slammed the retail and hotel sectors as tourist arrivals slumped, breaking the industries already reeling from months of US-China trade war and anti-government protests in 2019. The Hong Kong government unveiled last month a record HK$139 billion budget deficit to help shore up the economy that contracted last year for the first time since the global financial crisis.
Hong Kong has recorded 100 infections and two deaths so far from the Covid-19 disease. Since the outbreak, the government has ordered school closures through Easter, and tried to assuage residents' fears about the supply of daily essentials amid hoarding. Other reports point to a deeper slide in retail sales and bankruptcies.
ADVERTISEMENT
The desperation is reflected in the number of applications for "certificates of no criminal conviction", a necessary document for emigration applications, which surged by almost 24 per cent in the first two months this year to 4,377 from the same period last year, according to the Hong Kong Police Force.
Applications for the certificate jumped 41.4 per cent to 33,252 last year, and they could surge by 25 to 30 per cent this year amid the gloom, according to John Hu, founder and principal consultant at John Hu Migration Consulting.
Three in five Hongkongers who have not yet submitted applications for emigration said they had a higher desire to leave the city following the coronavirus outbreak, according to a survey of 150 people by Midland Immigration Consultancy last month.
ADVERTISEMENT
Homeowners are expected to discount their properties in a weak market in the near term, going by recent deals, according to Wong at Midland Realty. Prices in secondary home market slipped to a three-month low in January and could see a steeper decline in February on the full brunt of viral outbreak, according to Ricacorp Properties.
At Mei Foo Sun Chuen in Kowloon, one owner sold a 674-sq ft flat last week for HK$8.5 million after slashing HK$780,000 or 8.4 per cent off the asking price in a rush to emigrate, Midland's Wong said.
Another example is a flat measuring 986-sq ft that comes with a 825-sq ft garden at The Mediterranean in Sai Kung, which was sold for HK$17 million early last month, a loss of about HK$1.9 million including taxes and expenses. The owner paid HK$18.05 million for the unit in April 2016, according to property records.
"The original owner only decided to sell because he had to emigrate and leave Hong Kong," said Sam Chan, deputy district sales director at Centaline Property Agency.
"About 20 per cent" of emigrants would sell properties to fund their emigration plans, said Peggy Lau, sales director at Uni Immigration Consultancy.
Lau is fielding 30 to 50 emigration applications per month, double the volume from a year ago. "Clients would talk a lot of politics with me. They wanted a more stable life for their children," she said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.