China's fifth-richest person bought what was once the world's most expensive house for half the price it fetched in 1996.
Property tycoon Hui Wing Mau paid HK$230 million (US$30 million) for Genesis, a 8230m2 home in Hong Kong's posh Peak district. Chef-turned-developer Wong Kwan paid HK$540 million for the home five years ago, a record at the time.
The sale encapsulates Hong Kong's boom and bust like no other. Hui, whom Forbes magazine said built his fortune in Shanghai and Beijing property, bought the mansion from Bank of East Asia, which seized it because Wong's company, Pearl Oriental Holdings Ltd, couldn't repay debt.
"The prices were excessive even at the time," said Peter Churchouse, a managing director at Morgan Stanley Dean Witter & Co, said in October when the bank began efforts to sell Genesis.
"This was hubris."
Many others shared Wong's misplaced optimism. The price of Hong Kong real estate almost doubled in the 18 months through June 1997, just before the handover to China.
Then came Asia's financial crisis. Property prices plummeted by more than half in the next two years, and have remained largely stagnant ever since. Some 65,000 Hong Kong people own apartments worth less than what they paid.
The Bank of East Asia foreclosed on the house in July as Pearl struggled to repay US$205 million in debt.
The sale won't cover the HK$323 million owed by Pearl to Bank of East Asia, which may force the developer into bankruptcy.
"I can't tell you if we'll file for bankruptcy at this point, but we will certainly ask them to make up the shortfall," said Peter Choi, the bank's head of special assets. Pearl Oriental officials didn't return phone calls.
Other banks want their money back. Last week, Industrial and Commercial International Capital Ltd demanded payment of HK$47 million in overdue debt backed by two floors in Pearl Oriental Center, the company's flagship office building in Wan Chai.
Pearl's Wong is trying to sell the building and his controlling stake in Pearl.
Hui, 51 and worth an estimated US$700 million, started his property empire with money earned exporting textiles.
He bought Genesis through Dong Jian Tech.com Holdings Ltd, a Hong Kong company he bought in October after its former controlling shareholders were censured by the Hong Kong stock exchange.
Dong Jian, which is changing its name to Shimao China Holdings Ltd and is dropping its Internet business to focus solely on real estate, plans to sell 158.5 million new shares at HK$0.65 each to help pay for its purchase.
Dong Jian shares fell 14 percent to HK$1.08 today as they resumed trading after a one-day suspension.
Pearl Oriental shares fell 1.9 percent to HK$0.05-1 and have slumped more than 90 percent from their peak in 1997.
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