Hong Kong’s Property Distress Is Catching Up With City’s Banks
- Lenders, building owners are realizing losses in asset sales
- Commercial real estate slump is showing no signs of abating
Distressed property sales in Hong Kong are beginning to bite banks that used to be well protected against loan losses.
The city’s commercial real estate sector is going through one of its worst slumps in history, with no end in sight. Average prices of office buildings, shopping malls and other properties have fallen more than 40% from their highs in 2018, eroding the value of the collateral backing many bank loans. Defaults are also rising as more property owners and developers run into cash flow difficulties.