Hong Kong’s debt-laden property sector is staring at deepening financial strain as developers grapple with soaring repayment obligations, plunging asset values, and a tightening credit environment. Analysts warn that more defaults are likely, threatening both the economy and the banking system of the Asian financial hub.
According to LSEG data, local developers’ bond maturities will jump nearly 70% next year, climbing to $7.1 billion in 2026 from $4.2 billion this year. The strain is already showing: Road King became the first Hong Kong-based developer to default on bond coupons since China’s property crisis erupted in 2021, while Emperor International earlier this year failed on a loan repayment.
The sector’s troubles are compounded by a collapse in commercial property valuations, which have fallen more than 50% from 2019 peaks, with little sign of recovery. “It will be at a point where there is actually no chance for them to repay such loans,” said S&P Global Ratings analyst Edward Chan, adding that smaller developers are most at risk as banks slash exposure.
New World Development, burdened with HK$180 billion ($23 billion) in debt, narrowly avoided default in June through an $11.2 billion refinancing deal. Still, it faces $168 million in repayments next year and $630 million in 2027. Lai Sun Development, meanwhile, has $524 million due in 2026.
Banks are also feeling the pinch. Hang Seng Bank took a HK$2.5 billion charge on real estate loans in the first half of the year, a 224% increase from 2024. HSBC reported its high-risk Hong Kong commercial property loans tripled to $18.1 billion by June.
Despite reassurances from Hong Kong Monetary Authority chief Eddie Yue that banks remain “well-capitalised,” market observers note lenders are reluctant to seize assets or demand immediate repayment, fearing deeper shocks to an already fragile sector.
With property and related industries contributing about a quarter of Hong Kong’s GDP, analysts warn that rising defaults could cast a long shadow over the city’s economic recovery.\
Written By Rodney Mbua
