Towering HK building turning out to be a millstone for investors

Owners, many of them Chinese developers, hit by collapse of mainland housing sales

When The Center skyscraper was sold in Hong Kong in 2017, the record US$5.2 billion (S$7 billion) price tag was so high that investors had to form a consortium to take a majority stake and divvy up the floors. That decision is rapidly becoming a millstone.

Cash-strapped owners, many of them Chinese home builders, are now competing with one another to secure revenue from tenants or buyers at the 73-storey tower after housing sales in the mainland collapsed.

Values have been dragged down as a result, with some space now offered at almost 50 per cent less than the purchase price. That compares with a wider drop of about 30 per cent for offices in the Central district since June 2018, according to data compiled by broker Knight Frank.

On a visit by Bloomberg News reporters in April, ceiling panels were missing in places, with long electric wires hanging from gaps on some floors. Back then, there were notices plastered over the entrance of a vacant office that suggested its previous occupant had not been paying rent.

On the same level, withered leaves littered the floor beneath a Chinese money tree, the symbol of good luck and prosperity.

The woes at the building symbolise a broader credit bust that hit the city after the Chinese government's crackdown on excessive leverage ended a property frenzy.