CK Asset $2.6B Sale of 21 Borrett Road Luxury Project Collapses in Hong Kong

Li Ka-shing’s CK Asset said Thursday that a deal to sell its 21 Borrett Road luxury project in Hong Kong’s Mid-Levels to Sino Suisse fell through after the Singapore-based firm failed to make the first payment on the HK$20.8 billion ($2.6 billion) consideration.

The group controlled by Hong Kong’s richest man terminated the sale and purchase agreement signed last September after Sino Suisse missed the first part payment of HK$1.04 billion and accrued interest, CK Asset said in a filing with the Hong Kong stock exchange.

The developer on Thursday gave a termination notice to Sino Suisse, a wealth manager founded by former UBS bankers, and forfeited the HK$2.08 billion deposit.

“Despite the parties’ attempts to address the default through discussion on a without prejudice basis, no resolution has been reached,” CK Asset said in the filing.

Back on the Market

CK Asset executive director Justin Chiu told Reuters that changes in the market and interest rates had put the deal in jeopardy and that an accord could not be reached on various proposals to solve the problem.

The group plans to put 21 Borrett Road back on the market and expects no material adverse impact as a result of the termination.

CK Asset surprised observers with its sudden September announcement of the asset disposal, from which it had anticipated a HK$6.3 billion gain. The agreement came on the heels of reports that Li had seen his sizeable UK investments take a drubbing in line with the plunge in value of the British pound.

Sino Suisse was set up six years ago by former UBS executive Albert Liu, who had headed the Swiss bank’s ultra-high-net-worth business in China for 16 years and oversaw assets under management of more than $27 billion. He co-founded Sino Suisse alongside former UBS colleague Ruth Chung, who now heads the Greater China market at BNP Paribas Wealth Management.

In a 2021 interview with Singapore Management University, Liu said he expected Sino Suisse to reach $7 billion in AUM by 2024 and breach the $10 billion mark around 2026. The latest available public data showed that the asset manager had about $4 billion in AUM towards the end of 2021.

Housing Headaches

Market watchers told Mingtiandi last September that the slow progress of sales at 21 Borrett Road may have factored in CK Asset’s surprise decision to exit an entire luxury project, with the builder having sold a mere 33 apartments for a combined total of HK$6.8 billion since the 115-unit first phase was launched in February 2021.

JLL reported this week that mass residential capital values in Hong Kong fell 1.2 percent in the second quarter of 2023 compared with the prior three months after rebounding 4 percent in the first quarter. The luxury residential segment fared better, however, as its capital values climbed 1.3 percent over the last six months.

Transaction volume for properties valued at or above HK$20 million surged 96.6 percent in the first half as pent-up demand was unleashed and new supply increased, the consultancy said.

JLL Hong Kong chairman Joseph Tsang said the local housing market is experiencing the longest price adjustment since 2008 and has not found a bottom. He recommended the government remove cooling measures, particularly on stamp duties, and scrap the mortgage stress test to give banks flexibility to assess loan risk.