Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Thursday, Mar 28, 2024

China thwarts US sale of multimillion-dollar real estate in Hong Kong

China thwarts US sale of multimillion-dollar real estate in Hong Kong

The snag is akin to a water-down version of freezing US assets in Hong Kong, said Kevin Tsui, associate professor in the John E. Walker department of economics at Clemson University in South Carolina. “They can use it, but they cannot sell it,” he said.

One of Hong Kong’s biggest real estate transactions of 2020 has been caught in the crossfire of souring US-China diplomatic relations, as the United States consulate failed to get its sale of luxury villas on The Peak recognised by the city’s Land Registry.

The HK$2.6 billion (US$330 million) sale on September 10 of six multi-storey villas at 37 Shouson Hill Road could not be registered by Hong Kong’s Land Registry because of “diplomatic obligations” imposed by the Chinese government on the US consulate, buyer Hang Lung Properties said in an exchange filing on Wednesday. Hang Lung bought it for a 20 per cent discount to the valuation.

The developer said it was informed by the Land Registry on December 21 that the US consulate is not a commercial entity, and the Shouson Hill villas are not an ordinary real estate property. The transaction involved foreign affairs between China and the US and should not be regarded as an ordinary commercial activity, it added.

The US government must submit a written application to the Chinese government via the Office of the Commissioner of the Ministry of Foreign Affairs of China in the city with at least 60 days’ notice, Hang Lung said, citing an advisory from the Chinese government to the local authority.


An aerial view of 37 Shouson Hill Road on The Peak on Hong Kong Island on May 30, 2020.


“There is a possibility that the transaction will be dropped,” said Vincent Cheung, managing director at Vincorn Consulting and Appraisal in Hong Kong. “The letter made it rather clear that the deal is not just a property transaction, but carries a political meaning. Whether it can move forward only depends on the relationship between US and China. If the Chinese government gives its approval, it would represent a gesture of goodwill.”

The snag was “exceptional” and was not made known to, or anticipated by, by either Hang Lung or the tenderer of the property at the time of the sale, Hang Lung said. Still, Hang Lung said that it is “willing and able to proceed” with the deal after “careful consideration,” if the US can comply with the diplomatic obligations.


Ronnie Chan Chi-chung, chairman of Hang Lung Properties, during a press conference in Hong Kong on January 21, 2020.


The Chinese government weighed in on Wednesday afternoon. “US embassies must apply to buy, sell real estate,” said foreign ministry spokesman Wang Wenbin during a regular press briefing in Beijing.

Hang Lung’s investors appear to have been lukewarm about the developer’s purchase. Shares of the company have fallen 2.4 per cent since Hang Lung won the tender on September 9, underperforming the 10.3 per cent gain in the benchmark Hang Seng Index. The stock rose by 2.1 per cent to HK$20.15 after today’s statement, the highest in more than a month, and reversing its earlier decline.

Such a setback is “unprecedented, and much should have been done prior to the sale,” said Polly Chu, partner at the law firm Withers in Hong Kong. The buyer should consider seriously whether to buy, or request to revise the tender terms to extend the completion date, with the right to termination if written consent is not obtained, she said

The US consulate said it complied with the relevant obligations and requirements, while arguing that “diplomatic obligations applicable to the sale of the property are matters between sovereignties and would not affect title of the property,” Hang Lung said, citing a letter yesterday by the US representative office.


The newly-renovated Plaza 66, Hang Lung’s flagship property project in Shanghai, on September 8, 2013.


The developer and the tenderer are “evaluating and taking legal advice” on appropriate actions, “including exploring the feasibility of extending the time” for completing the deal, Hang Lung said.

“Additional time is needed for the buyer and seller to complete the administrative processes required for closing on the property,” said a spokesperson at the US consulate’s office in Hong Kong, declining to say whether a written application had been sent to the Chinese government for the sale.

Hang Lung’s chairman, the billionaire Ronnie Chan Chi-chung, is a frequent interlocutor on China-related affairs, and does not shy from having verbal jousts with journalists on political issues including Hong Kong’s year-long anti-government protests and the national security law enacted by the Chinese legislature for Hong Kong.

Born in 1949, Chan is also chairman of the board of trustees of the Asia Society in Hong Kong, a non-profit organisation founded in 1956 by John D. Rockefeller III, with the mission of educating the world about Asia.

Hang Lung has been investing in China since the 1990s, starting with its landmark Plaza 66 and Grand Gateway 66 projects in Shanghai. It has been expanding its presence in secondary cities such as Shenyang, Jinan, Wuxi, Tianjin, Dalian, Kunming, Wuhan and Hangzhou with projects under the “66” brand. The company achieved HK$4.54 billion revenue from property leasing in China, accounting for 53 per cent of the company’s 2019 total revenue.


The US government bought the land at 37 Shouson Hill Road in June 1948 for an unknown price when Hong Kong was still a British colony, according to public records at the Land Registry. Construction on the site was completed in 1983.

Hang Lung, which mainly develops shopping centres and offices, said it will redevelop the Shouson Hill Road site into multiple luxury detached houses by 2024, with plans to invest HK$4 billion in the project.

Details of the tender came to light on May 30 hours after US President Donald Trump announced that he would revoke Hong Kong’s special customs status, in response to the Chinese legislature’s announcement introducing the national security law for the city.

“It’s more about the Chinese government trying to impose hurdles for the US in selling the property,” said Kevin Tsui, associate professor in the John E. Walker department of economics at Clemson University in South Carolina, adding that the latest snag is a watered down version of freezing US assets in Hong Kong. “Perhaps [the Chinese government] sees it as a test of the new [Biden] administration,” using it as a bargaining chip, he said.

The asset sale has to “wait until Biden becomes president and [the US and China]] start their negotiation,” Tsui said, and the saga will last until “their relationship becomes better. The US can still use the asset, but they are not allowed to sell it,” he added.

Newsletter

Related Articles

Hong Kong News
0:00
0:00
Close
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
×