Goldman Sachs-owned Office Tower In Hong Kong Slashes Asking Price

HONG KONG – An office building in the Chinese territory that is majority owned by Goldman Sachs Group has reduced its asking price by at least 33 percent – a move that shows the dismal state of Hong Kong’s office market, reported Bloomberg on Monday (13 November, SGT).

Sources revealed that the 25-storey 88WL office building in the Sheung Wan area, which is next to Central, is struggling to entice buyers. Due to this, the commercial property has slashed its asking price to around HK$900 million (US$115 million). Earlier this year, the sellers were expecting over HK$1.3 billion, disclosed one of the sources.

Notably, the sale of the office building is being conducted by Shanghai-based property fund manager KaiLong Group, which also holds a stake in the asset.

Also, it’s not clear whether Goldman’s stake in the office property is being held in its own balance sheet, or it’s holding the asset on behalf of customers. Both the American investment bank and KaiLong did not respond when requested to comment.

The reduction in 88WL office building’s asking price highlights the sluggish state of Hong Kong’s commercial property sector, which have been impacted by higher borrowing costs and elevated office vacancy levels.

Moreover, multinational banks have been slashing office space to cut costs, while Chinese companies are hesitant to expand amidst a slow economy. Also, a huge amount of upcoming office stock is causing an office supply glut in Hong Kong, negatively affecting the demand for older office properties situated in non-core areas.

Furthermore, office rental yields have been eclipsed by interest rates. As such, few buyers are keen to acquire commercial properties, especially office buildings. In fact, government statistics show that prices of office towers in the city have fallen by around 20 percent from their peak in 2018.