Hong Kong’s property giants face a reckoning as soaring debt repayments collide with crashing valuations and lender unease

18 August 2025

Buildings stand in Hong Kong, China February 24, 2025. REUTERS/Tyrone Siu/File Photo

Across the skyline of Hong Kong, the once‑glamorous towers and bustling shopping precincts now cast long shadows of financial strain. Developers pillars of the city’s economy are confronting a mounting crisis: their debt burdens are becoming far too heavy to bear.

Over the past few years, a blistering downturn in property demand has devastated sales and asset values, especially in office and retail segments, whose valuations have fallen more than fifty percent since 2019. As the sector that underpins roughly a quarter of Hong Kong’s GDP, the collapse of this market threatens to ripple through the region’s economic fabric.

Alarm bells are ringing louder for 2026, with bond maturities among local developers projected to surge by nearly seventy percent rocketing from $4.2 billion in 2025 to $7.1 billion next year. For many, this looming repayment cliff is dangerously out of reach.

Already, the crisis is claiming casualties. Road King Infrastructure became the first developer in the city to default on offshore bond payments, missing a coupon due in mid-July. Earlier in the year, Emperor International defaulted on a loan. Such breaches have shattered market confidence and intensified fears of contagion.

Among the most vulnerable names is New World Development. The company narrowly evaded default in June thanks to an $11.2 billion refinancing lifeline, but face‑ng ongoing pressure, it still confronts debt obligations of $168 million in 2026 and $630 million in 2027 numbers that offer only a short reprieve. Lai Sun Development is not far behind, with $524 million in repayments scheduled for next year.

This slump isn’t confined to developers; it’s gnawing at the financial sector. Hang Seng Bank recorded a staggering HK$2.5 billion charge in the first half of the year related to commercial real estate exposure more than doubling allowance levels from the same period last year. HSBC’s internal modeling now counts $18.1 billion in Hong Kong’s commercial property loans as “increased credit risk,” compared to just $6.5 billion at the start of 2025.

Despite the turbulence, regulators caution against alarm. The Hong Kong Monetary Authority maintains the banking system is well‑capitalised and robust enough to withstand volatility, pointing to strong capital adequacy and provisioning.

But many bankers are cautious. To prevent triggering a deeper crisis, they are choosing not to recall loans or foreclose on assets even when developers fall behind on payments fearing that such actions would further erode asset values and destabilize the broader market.

Analysts are warning of a vicious cycle: forced "fire sales" by distressed developers could trigger a new wave of valuation declines, dragging even more firms into insolvency. Without fresh capital infusions or a dramatic market rebound, many developers could find themselves unable to meet future obligations.

The implications here are multifaceted. On one level, debt-laden developers under stress inject uncertainty into Hong Kong’s economic outlook. On another, the banking sector long a conduit of growth in this city is increasingly exposed. And beyond that lies the societal reality of empty offices, shuttered retail spaces, and the erosion of investor confidence in one of Asia’s most iconic property markets.

Hong Kong may still exude its usual energy and elegance, but beneath its shimmering facade lies a ticking debt timebomb. As the countdown to 2026 accelerates, the question is not if the market will bend, but how and at what cost.