Hong Kong property investment firm Gale Well Group, which has been divesting assets, sold three shops this month, incurring a loss of more than HK$51 million (US$6.5 million) on two of them, as the city’s retail real estate market remains mired in a downturn.
Gale Well sold a 2,780 sq ft street-level shop at King Kwong Street in Happy Valley for HK$28.8 million, nearly 40 per cent lower than the HK$46 million it paid in 2008, according to Land Registry data. The transaction was completed on May 23 through a holding company, Fine Keen Investment. Gale Well chairman Rita Tong Liu is a director at Fine Keen, according to the Companies Registry.
The company also sold a 1,537 sq ft shop on the ground floor of Haleson Building in Central for HK$38.8 million, according to property agents. The price represented a 47 per cent loss on the HK$72.8 million paid in 2011 by Parkmax Investment, according to the Land Registry. Liu is a Parkmax director.
Gale Well’s third divestment was a 21,702 sq ft three-storey shop on Morrison Hill Road in Causeway Bay for HK$110 million, according to Savills, which handled the sale. The transaction resulted in a profit of 49 per cent for Keenplan International, which bought the property for HK$73.8 million in 2005, according to the Land Registry. Liu is a director of Keenplan.
Last week, Gale Well appointed Savills as the agent for three shops in North Point, Causeway Bay and Wan Chai, which have a combined indicative price of HK$190 million.
Gale Well did not immediately respond to a request for comment.
In an interview with the Post in March, Gale Well’s founder, vice-chairman and CEO Jacinto Tong Man-Leung said that the company was looking to offload assets worth nearly HK$3 billion amid fears that banks could call their loans amid a downturn in the city’s real estate market.
Tong said the company planned to sell around 10 per cent of its property portfolio to balance its loan ratio and “put the bank’s mind at ease”.
In April, it sold the 39th floor of the Far East Finance Centre for HK$194 million, or HK$18,000 per square foot, the lowest price per square foot in 17 years in the grade A tower, according to Land Registry data. It had sought HK$250 million, or HK$23,148 per square foot.
In March, Gale Well sold a 10,800 sq ft plot of land at 68-70 Chung Hom Kok Road in Southern District for HK$220 million, down from an indicative price of HK$380 million. In February, the firm parted with its long-time headquarters in The Sun’s Group Centre in Wan Chai for HK$79.79 million.
Meanwhile, Gale Well has yet to find a buyer for Austin Plaza, a 21-storey grade B commercial building in Tsim Sha Tsui, which has been on the market for HK$880 million since January. The 26-storey Butterfly on Morrison Boutique Hotel in Causeway Bay, which has an indicative price of HK$630 million, has found no takers since November.
As rental incomes sink and valuations shrink, many property owners are struggling to meet their debt obligations amid high rates, leading to a surge of distressed assets.
In 2024, roughly three out of four property transactions were distressed sales, according to Reeves Yan, executive director and head of capital markets at CBRE.
