But Li’s family seems determined to stress test Hong Kong’s property market. Its unconventional moves are causing unease among other developers and homeowners.

Last week, CK Asset stirred up a local buying frenzy when it put up for sale flats at a development in the north Kowloon district. More than 600 units were priced at HK$14,686 (US$1,880) per square foot on average, a seven-year low for new apartments in the city. Tens of thousands of buyers wrote deposit checks, hoping to snatch the deal. 

It was the first taste of a price war before the city gets flooded with supply. The number of unsold new apartments — completed or under construction — has hit a decade high. Over 35,000 units from 82 projects could be coming to market in the second half, according to Bloomberg Intelligence. For comparison, the last time the city recorded at least 30,000 new apartment sales was 1998. Going forward, rival developers are expected to price units at 10% below so-called market levels. 

CK Asset will pounce when it spots rivals in distress. It was in talks with banks, including HSBC Holdings Plc and Standard Chartered Plc, to take over most of the HK$10.2 billion project loan for The Corniche, a luxury residential building in the southern Ap Lei Chau district, built by Chinese developers Logan Group Co. and KWG Group Holdings Ltd. Both companies had defaulted on their dollar bonds and the project loan is due one year from now. CK Asset had indicated it would make the acquisition in cash. 

This deal, if successful, would leave nearby luxury homeowners deeply unsettled. The Corniche went on the market in January at a unit price of HK$50,000 per square foot, although so far only three flats have been sold. CK Asset, on the other hand, might be getting this site for just over HK$15,000 per square foot. So at what price will Li sell these ocean-view apartments? 

After all, the billionaire has a reputation of hard-nosed dealmaking. In late 2017, he sold The Center, a prestigious office tower in the Central business district, for a record HK$40.2 billion to a consortium of investors that subsequently divvied up the 73 floors. It was norm-breaking: Traditionally, a grade-A building would be sold to a single buyer, which the best tenants prefer because of better maintenance of common areas.

Sure enough, Goldman Sachs Group Inc. moved out shortly after. More drama ensued. In early 2022, Shimao Group Holdings Ltd. founder Hui Wing Mau, one of the consortium members, rushed to put up two floors for sale as his mainland real estate empire ran into financial trouble. Other distressed Chinese developers, such as Kaisa Group Holdings Ltd., offloaded their floors, thereby denting The Center’s image. But hey, Li had already cashed out. 

To many, Hong Kong’s property prices feel eerily high. Home values are only around 14% off their 2021 peak. It’s cheaper to rent than to buy, when comparing prevailing mortgage rates with rental yields. Office vacancy rates in Central — one of the world’s most expensive for commercial space — are above 10%, the highest since at least 2006. 

In Hong Kong, the lack of pricing transparency is in part due to onerous stamp duties(1) for some buyers put in place a decade ago. To curb speculation, the government discourages foreign buying, second-home ownership, and transactions in general. It has killed a vibrant market. So don’t blame Superman for being cut-throat. His decisions make good business sense, simple as that. 

More From Bloomberg Opinion:

• Hong Kong Need Not Compete With Singapore on This: Shuli Ren

• WeWork’s Glass Walls Are Starting to Close In: Chris Bryant

• Hottest Office Market in US Is … Midtown Manhattan?: Justin Fox

(1) Foreigners and second-home buyers have to pay an extra 15%, while those selling their apartments within three years face a levy of up to 20%.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. A former investment banker, she was a markets reporter for Barron’s. She is a CFA charterholder.

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