The Corniche's unintended popularity
It's hard to imagine a better example of Hong Kong's slumping property
market than the Corniche, the lavish residential complex in Ap Lei Chau
overlooking the South China Sea.
Since its 295 units went on sale in January last year, only 31 have been sold at prices ranging from $5 million to nearly $24 million each. Sales picked up after its Chinese developers slashed prices by as much as 44%, but they're still nowhere close to the $3.9 billion in total apartment sales the project was originally expected to haul in.
That cargo ship in the distance may have more people than the Corniche. Photographer: Lam Yik/Bloomberg
At this rate, despite the developers' claims that the Corniche is "destined to become the most sought-after address" in the southern part of Hong Kong, it's looking more like the project may turn into one of the biggest flops the city's ever seen in its residential market.
I've been following developments at the ill-fated luxury towers for over a year now, and it turns out that the Corniche has been quite popular behind the scenes just not with homebuyers (as cash-strapped developers Logan Group and KWG intended) but among the private-credit crowd.
You can read all about it in the story published today that I worked on with my colleague Megawati Wijaya, but in a nutshell, there's been fierce competition to lend Logan and KWG money so they can repay more than $1 billion in debt coming due at the end of this month.
Why? Because of the high levels of interest the developers are prepared to pay to avoid defaulting on the debt.
Everyone from billionaire Li Ka-shing's CK Asset to Singapore's GIC sovereign wealth fund considered getting in on the deal. In the end, an investor group that included Davidson Kempner prevailed, and signed one of the largest private credit deals in Hong Kong.
The transaction also hands the developers a much needed lifeline. The 13% annual interest they agreed to is a lofty price to pay but it allows them to focus their attention back to their ongoing fire sale.
So if you're looking for a new place, the Corniche's 9,663-square-foot (898-square-meter) penthouse in Tower 3 is still available. Sure, it's next to a sewage treatment facility, but there are hardly any neighbors, it's conveniently located to Horizon Plaza's furniture outlets and the view is mesmeric. Lorretta Chen
Since its 295 units went on sale in January last year, only 31 have been sold at prices ranging from $5 million to nearly $24 million each. Sales picked up after its Chinese developers slashed prices by as much as 44%, but they're still nowhere close to the $3.9 billion in total apartment sales the project was originally expected to haul in.
That cargo ship in the distance may have more people than the Corniche. Photographer: Lam Yik/Bloomberg
At this rate, despite the developers' claims that the Corniche is "destined to become the most sought-after address" in the southern part of Hong Kong, it's looking more like the project may turn into one of the biggest flops the city's ever seen in its residential market.
I've been following developments at the ill-fated luxury towers for over a year now, and it turns out that the Corniche has been quite popular behind the scenes just not with homebuyers (as cash-strapped developers Logan Group and KWG intended) but among the private-credit crowd.
You can read all about it in the story published today that I worked on with my colleague Megawati Wijaya, but in a nutshell, there's been fierce competition to lend Logan and KWG money so they can repay more than $1 billion in debt coming due at the end of this month.
Why? Because of the high levels of interest the developers are prepared to pay to avoid defaulting on the debt.
Everyone from billionaire Li Ka-shing's CK Asset to Singapore's GIC sovereign wealth fund considered getting in on the deal. In the end, an investor group that included Davidson Kempner prevailed, and signed one of the largest private credit deals in Hong Kong.
The transaction also hands the developers a much needed lifeline. The 13% annual interest they agreed to is a lofty price to pay but it allows them to focus their attention back to their ongoing fire sale.
So if you're looking for a new place, the Corniche's 9,663-square-foot (898-square-meter) penthouse in Tower 3 is still available. Sure, it's next to a sewage treatment facility, but there are hardly any neighbors, it's conveniently located to Horizon Plaza's furniture outlets and the view is mesmeric. Lorretta Chen
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