In a striking turn of events, the 盛滙商舖基金, led by entrepreneur Lee Koon Hung, has embarked on a rapid divestment of commercial properties, selling five shops in Hong Kong within just two months. This flurry of activity follows the fund's "first drop of blood" in early March 2025, marking a significant shift in strategy as the market shows signs of volatility.
Since March, the fund has recorded losses ranging from approximately 2.7 million to 8.9 million HKD per transaction, averaging a staggering 28% reduction in property values. Cumulatively, this has led to a loss of nearly 33 million HKD, with properties sold at prices far below their acquisition costs. The shops involved in these transactions were primarily acquired during the pandemic, labeled as "bargain goods" at the time.
For instance, a shop located at 710 Tung Choi Street in Mong Kok was purchased in 2021 for 21 million HKD and is currently leased to a congee shop for 58,000 HKD per month. However, it was sold for just 13.4 million HKD, resulting in a loss of 7.6 million HKD and a depreciation of 36%. Another notable transaction involved a shop at 1540 Sai Ying Pun, which was bought for 24.5 million HKD in 2022. Initially intended to be sold for 28 million HKD, it was ultimately sold last week for 15.6 million HKD, reflecting a price drop of over 44% and a 36% loss compared to its original purchase price.
According to market data, since the initial loss recorded on March 3, the 盛滙商舖基金 has sold five shops for a total of approximately 85.08 million HKD. This is against a total acquisition cost of around 118 million HKD, leading to an average depreciation of nearly 28% across these properties. Lee Koon Hung noted that this marks the fund's first sale at a loss since its inception in 2016, emphasizing the need to maintain liquidity and seek new investment opportunities.
Lee explained, "I will talk about making money, and I will admit to losing money!" His candid acknowledgment of the losses reflects a pragmatic approach to the current market conditions. He reiterated that the decision to sell was not driven by pressure from banks but rather a strategic move to adapt to the changing landscape of commercial real estate.
In the past month alone, the fund has accelerated its selling pace, with properties held for periods ranging from 1.5 to over 3 years, experiencing depreciation rates between 14% and 57%. The latest sales include a shop at 8R Hau Fook Street in Tsim Sha Tsui, which was purchased for 20 million HKD in April 2023 and sold for 17.3 million HKD, incurring a loss of approximately 2.7 million HKD, or about 14%. This shop is currently leased to a beverage establishment for 45,000 HKD, yielding a return of 3.1%.
Another recent sale involved the 9-19A Shung Hei Street property, which was sold for 13.4 million HKD after being rented to a congee shop for 58,000 HKD per month. Lee had acquired this shop for 21 million HKD in August 2021, resulting in a loss of 7.6 million HKD and a depreciation of 36%. Notably, both shops were taken over by buyers from mainland China.
In total, the five shops sold in the past month have amounted to 85.08 million HKD, with the average loss across these transactions standing at 28%. Other properties included in this wave of sales are located at 126 Wu Sung Street, purchased for 27.5 million HKD and sold for 18.68 million HKD, and a shop at 180 Kwai Chung Road, bought for 25 million HKD and sold for 20.1 million HKD. The Sai Ying Pun shop, sold for 15.6 million HKD, was initially bought for 24.5 million HKD, reflecting a significant depreciation of up to 57%.
Lee Koon Hung, reflecting on the fund's performance, stated, "According to the Rating and Valuation Department data, shop prices have fallen nearly 40% from their peak. We will continue to sell shops, aiming to cash out 2 to 3 billion HKD, reduce our holdings, and reinvest in quality street shops." He emphasized the necessity of maintaining liquidity and adapting to market conditions, asserting that the fund cannot afford to be rigid in its strategy. "The market rises and falls uncontrollably, and one can only maintain a positive attitude and continue to exchange goods," he added.
This aggressive selling strategy marks a pivotal moment for the 盛滙商舖基金 as it navigates the complexities of Hong Kong's commercial property market. With Lee Koon Hung at the helm, the fund aims to reposition itself by reinvesting in properties that are fairly priced, despite the current economic challenges.
As the situation develops, observers will be keen to see how the fund's strategy unfolds and whether it can successfully transition from a period of loss to one of renewed growth and opportunity in Hong Kong's competitive real estate landscape.
