A Hong Kong businessman whose wife was arrested in Vietnam has emerged as the latest desperate seller in the city’s increasingly turbulent property market.

Eric Chu is offloading properties ranging from a hotel to luxury apartments in Hong Kong, sometimes at a significant loss after his Vietnamese wife became embroiled in one of the most high-profile scandals in the Southeast Asian nation.

The couple have commercial real estate valued at about HK$8 billion ($1 billion) in the city after already selling at least HK$1 billion worth of properties in the past few months.

While the sales are more likely the result of individual financial problems, the low transaction prices threaten to dampen sentiment in Hong Kong’s already weak market.

Chu offloaded a hotel in Tin Hau area in June at almost half the price he paid for it in 2017, according to government documents and media reports. In the same month, he sold a project under construction to provide residential and commercial space in Quarry Bay for HK$412 million to local developer Wang On Properties Ltd. That’s much less than the HK$678 million that he reportedly paid for the asset in 2018.

The couple’s remaining commercial properties include Nexxus Building in the heart of Central which counts the Hong Kong Bankers Club as a tenant; two commercial buildings in the central business area; and several houses in Severn 8, a luxury project on the Peak. A buyer has offered to pay more than HK$6 billion for Nexxus Building, Sing Tao reported recently.

All of Chu’s properties are open to offers, according to several property agents. The assets are either held by him, his wife Truong My Lan, their daughters or associates with ties to their companies.

The couple began actively investing in Hong Kong’s property market in the mid-2000s, buying everything from houses on the Peak to skyscrapers. Now they’re selling into a commercial property market that’s at its worst in almost a decade.

Distressed Properties

The fire sale coincides with a number of distressed properties that are on the market, including those formerly owned by beleaguered Chinese developers. China Evergrande Group’s creditors have yet to find a buyer for its Hong Kong headquarters almost a year after seizing it. Property tycoon Chen Hongtian also had a commercial building taken by a creditor, which put it up for sale recently.

Hong Kong office values have declined about 35% from their peak in 2018, according to Colliers International Group Inc. The city’s overall vacancy rate was almost 15% in June, more than three times higher than in 2019, Colliers data show. With interest rates rising along with supply, investors have little appetite to purchase Hong Kong’s office blocks.

It’s not easy to sell in the luxury residential market either. The upscale sector saw transaction volume declined by 24% in the second quarter from the first three months of the year, according to Savills Plc. Sustained high interest rates, stock market turbulence and a lack of affluent mainland Chinese buyers contributed to the fall, the firm said. Savills expects distressed sales to dominate the market with few transactions and volatile prices in the near future.

Vietnam Arrest

Lan is at the center of a fraud investigation by the Vietnamese police. Lan, chairman of Vietnam developer Van Thinh Phat Holdings Group, was arrested in October along with three other people including the group’s CEO on suspicion of appropriating trillions of dong in 2018 and 2019, according to a police statement.

The company didn’t respond to emailed requests for comment.

The 66-year-old started selling cosmetics at the age of 16, and she met Chu in Vietnam, the South China Morning Post reported. The two got married and went into the restaurant and hotel business before moving into real estate investing.

Founded by Lan in 1991, Van Thinh Phat Group was the first private company in Ho Chi Minh City, according to the company’s website. VTP Group’s developments span residential properties, offices, hotels and shopping centers, including a suspended $6 billion project called Saigon Peninsula with Malaysian billionaire Kok-Thay Lim’s Genting Group.

Once featured as a philanthropic socialite by Vietnam’s Communist party media, the owner of one of the country’s top skyscrapers has seen assets related to more than 700 VTP Group units frozen by Vietnamese authorities since Lan’s arrest, dealing a blow to the group’s business and adding a cash strain to the family.

--With assistance from Pui Gwen Yeung and Mai Ngoc Chau.