Hong Kong property fire sale: Eric Chu selling hotel, luxury flats after wife Truong My Lan arrested

While the sales are more likely the result of individual financial problems, the low transaction prices threaten to dampen sentiment in Hong Kong’s already weak market.

Chu offloaded a hotel in Tin Hau area in June at almost half the price he paid for it in 2017, according to government documents and media reports. In the same month, he sold a project under construction to provide residential and commercial space in Quarry Bay for HK$412 million to local developer Wang On Properties. That is much less than the HK$678 million that he reportedly paid for the asset in 2018.

The couple’s remaining commercial properties include Nexxus Building in the heart of Central which counts the Hong Kong Bankers Club as a tenant; two commercial buildings in the central business area; and several houses in Severn 8, a luxury project on The Peak. A buyer has offered to pay more than HK$6 billion for Nexxus Building, Sing Tao reported recently.

All of Chu’s properties are open to offers, according to several property agents. The assets are either held by him, Lan, their daughters or associates with ties to their companies.

Luxury villa at The Peak up for tender, could fetch as much as US$122.5 million

The couple began actively investing in Hong Kong’s property market in the mid-2000s, buying everything from houses on The Peak to skyscrapers. Now they’re selling into a commercial property market that is at its worst in almost a decade.

The fire sale coincides with a number of distressed properties that are on the market, including those formerly owned by beleaguered Chinese developers. China Evergrande Group’s creditors have yet to find a buyer for its Hong Kong headquarters almost a year after seizing it. Property tycoon Chen Hongtian also had a commercial building taken by a creditor, which put it up for sale recently.Hong Kong office values have declined about 35 per cent from their peak in 2018, according to Colliers International Group. The city’s overall vacancy rate was almost 15 per cent in June, more than three times higher than in 2019, Colliers data show. With interest rates rising along with supply, investors have little appetite to purchase Hong Kong’s office blocks.

Seller takes US$16.6 million loss on luxury Hong Kong home at The Peak

It’s not easy to sell in the luxury residential market either. The upscale sector saw transaction volume decline by 24 per cent in the second quarter from the first three months of the year, according to Savills. Sustained high interest rates, stock market turbulence and a lack of affluent mainland Chinese buyers contributed to the fall, the firm said. Savills expects distressed sales to dominate the market with few transactions and volatile prices in the near future.

Lan, chairman of Vietnam developer Van Thinh Phat Holdings Group, was arrested in October along with three other people including the group’s CEO on suspicion of appropriating trillions of dong in 2018 and 2019, according to a police statement.

The company did not respond to emailed requests for comment.

The 66-year-old started selling cosmetics at the age of 16 and met Chu in Vietnam. The two got married and went into the restaurant and hotel business before moving into real estate investing.

Founded by Lan in 1991, Van Thinh Phat Group was the first private company in Ho Chi Minh City, according to the company’s website. VTP Group’s developments span residential properties, offices, hotels and shopping centres, including a suspended US$6 billion project called Saigon Peninsula with Malaysian billionaire Kok-Thay Lim’s Genting Group.

Once featured as a philanthropic socialite by Vietnam’s Communist Party media, the owner of one of the country’s top skyscrapers has seen assets related to more than 700 VTP Group units frozen by Vietnamese authorities since Lan’s arrest, dealing a blow to the group’s business and adding a cash strain to the family.

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