'World's most-costly house' goes for half


A mainland China tycoon has taken control of Genesis, which sits on the Peak over Hong Kong's downtown and harbor

By Alex Frew McMillan
CNN Hong Kong

HONG KONG, China (CNN) -- A Hong Kong house once billed as the world's most expensive has been sold at less than half its original purchase cost.

The luxury mansion, known as Genesis, set a record for a single house -- since surpassed -- when it was sold for HK$540 million ($69.2 million) in 1997.

Now mainland China's Dong Jian Tech.Com Holdings Ltd. says it has arranged to buy Genesis for HK$230 million ($29.5 million) from the Bank of East Asia who took possession of Genesis this July.

The 28,000-square-foot mansion sits on Hong Kong's most-prestigious neighborhood, the Peak, and is garnished with commanding views of Victoria Harbor, an indoor pool, ornate Italian trimmings and Greek statues.

Its original owner sold it to Hong Kong businessman Wong Kwan's Pearl Oriental Holdings Ltd. at the height of Hong Kong's property bubble.

Wong turned down offers higher than his purchase price.

After the British handover of Hong Kong to China in 1997, he hoped to sell the house to the Hong Kong government as a home for the new chief executive.

Government knock-back

But Chief Executive Tung Chee Hwa chose to stay in his apartment, and the government opted not to purchase the lavish home.

Since then, Pearl Oriental has fallen on hard times, as has Hong Kong's whole property market.

It could no longer sustain its debt load of HK$177 million, which included loans on several office towers, as well as Genesis.

The Asian financial crisis, a steady flow of new land sales from the government and buying opportunities across the border in China have all helped depress property prices.

That has left many property owners with negative equity -- owing more to the bank on their homes than their homes are worth.

Speculative purchase

The bank had been scouting for buyers such as oil-rich Arabian princes.

But Dong Jiang is indirectly controlled by China's fifth-richest man, Hui Wingmau.

Hui said he was buying the house for speculative reasons.

"Because of the scarcity of land on the Peak, the acquisition provides a sound opportunity for the company to invest in the luxury residential market in Hong Kong," Hui said in a statement.

"It will be held for investment purposes and will be explored for its redevelopment potential and value."

Bar the odd dinner party, the house has stood empty since Wong bought it.

Wong says he has never spent a night in the house.

Speculators have been bidding up property developer's stocks in Hong Kong in the past two days, in the hope that the property market has finally bottomed.

The special administrative region of China ended its third and final land auction of the year on Tuesday, raising HK$232 million ($29.7 million), more than expected.