Problems of the Uber Rich

Mount Nicholson has the most expensive addresses in all of Asia

Yesterday's blog post was about the gob-smacking number of properties one person in Hong Kong owns. Today's is about the buying power of the 1 percent.

In November 2017, one person shelled out HK$1.16 billion (US$149 million) for two units on The Peak in one day. One cost HK$560 million for a 2,424 sq ft four-bedroom unit on the 12th floor of Mount Nicholson, which makes it out to be HK$132,000 per square foot, making it the most expensive real estate in Asia.

The same buyer also bought 4,579 sq ft unit on the same floor for HK$600 million, or HK$131,000 per square foot, making it the second most expensive property in the region.

How does one have US$149 million to spend on two homes? The 99 percent of us will never be able to make that amount in our lifetimes. We can't even fathom the number it's so huge.

But can the uber rich continue to buy luxury homes?

But it looks like those heady days of easily dropping hundreds of millions of dollars are over.

The media are reporting prospective buyers who have put down deposits with the intention of purchasing flats are failing to complete the deals, and as a result are giving up deposits worth tens of millions of dollars.

In one recent case, a buyer forfeited his or her HK$36.09 million (US$4.6 million) deposit after walking away from the a deal to purchase a luxury house on The Peak for HK$721.88 million.                                            

Again -- most of us can't even imagine what it's like to have HK$36 million, let alone giving up that much money.

Regardless, for the real estate market, buyers refusing to complete property transactions is a bad sign.

"It is definitely not good news for the market," said JLL executive director Joseph Tsang. "There are stories about buyers walking away from their purchases every day, but this one is more eye catching."

He is also concerned about the rising number of homes being repossessed by banks and the growing number of companies filing for bankruptcy. "This is a reflection of the worsening economy, although it is still too early to say whether it would trigger a wave of defaults."

That sadly has a trickle down effect on the rest of us ordinary folk, which means Hong Kong's economy is far from stable for 2019. Not all is well with the uber rich...