Hong Kong — The ongoing downturn in Hong Kong’s property market is compelling property owners to offer steep discounts on assets, with The Connaught hotel in Sai Ying Pun becoming one of the most prominent examples. The 29-storey, 52-room hotel, which lies adjacent to Central’s core business district, is now being offered at HK$600 million (US$77 million), a 40% reduction from its original asking price of HK$1 billion.

Jointly marketed by Colliers and Knight Frank, The Connaught is among several high-profile properties that have recently been put up for auction by landlords and investors grappling with the city’s economic challenges. The hotel, owned by a joint venture between Hong Kong-based Hanison Construction and New York’s private equity real estate firm Angelo Gordon, reflects the broader distress in the market.

Hong Kong’s property market has been under severe pressure, with sales of distressed properties rising dramatically. According to CBRE, such sales surged to about 75% of total transactions in the first half of the year, up from a typical 10% in previous years. The property consultancy attributes this spike to the challenges asset owners face in servicing debt, exacerbated by interest rates reaching a 23-year high.

Despite the broader market instability, some industry players remain optimistic about the hotel investment sector. Willis Mak, Executive Director at Knight Frank, noted that the hotel investment market has shown strong performance in recent quarters, driven by the revival of inbound tourism and government initiatives like the Quality Migrant Admission Scheme.

The Connaught’s strategic location near the Sai Ying Pun MTR station and the Hong Kong-Macau Ferry Terminal adds to its appeal, making it a viable option for various uses. Thomas Chak, Co-Head of Capital Markets and Investment Services at Colliers Hong Kong, emphasized the property’s potential as accommodation for company executives or as a dormitory for senior teaching staff, given its proximity to the University of Hong Kong.

Meanwhile, other significant properties are also hitting the market. JLL has been appointed as the sole agent for the sale of five industrial buildings in Sai Kung, collectively valued at HK$950 million. These buildings, with a gross floor area of 383,579 square feet, are touted for their potential conversion into a high-end senior living community.

As the market adjusts, the closing date for The Connaught’s tender is set for October 23. The outcome could provide further insights into the resilience—or continued fragility—of Hong Kong’s property market amid ongoing economic pressures.