Hong Kong’s property sector is under intensifying pressure as bond maturities are set to surge by nearly 70% next year amid falling sales and slumping valuations, raising concerns over developers’ ability to meet repayment obligations.
Road King recently became the first city-based developer to default on bond coupons since China’s property debt crisis began in 2021, following the first loan default by Emperor International earlier this year. Analysts warn that limited avenues for raising fresh capital and weak commercial property prospects could see more developers struggle to service debt.
Local property developers’ bond maturities are projected to rise to US$7.1 billion in 2026 from US$4.2 billion this year, according to LSEG data. Major developers such as New World Development and Lai Sun Development face substantial repayment obligations, with New World due to settle US$168 million next year and US$630 million in 2027, while Lai Sun has US$524 million due in 2026.
A recent US$11.2 billion debt refinancing deal helped New World avert default, but analysts note that cash-strapped developers are increasingly reliant on such measures. Property and related sectors account for roughly a quarter of Hong Kong’s GDP, meaning rising non-repayments could weigh heavily on the city’s economic prospects and its creditors, including HSBC.
Commercial property, particularly office and retail assets, remains a key vulnerability, with valuations down more than 50% from 2019 peaks and no recovery in sight. Hang Seng Bank reported a HK$2.5 billion charge on Hong Kong commercial real estate in the first half of 2025, up 224% from the previous year, reflecting rising bad loans in the sector. HSBC also noted a tripling of Hong Kong commercial real estate loans classified as high credit risk to US$18.1 billion by June.
Despite the challenges, Hong Kong Monetary Authority chief Eddie Yue stated that the banking system remains “well-capitalised and has sufficient provisions and good financial strength to withstand market volatilities.” Analysts added that banks are often choosing not to demand immediate repayments or seize pledged assets to avoid further depressing the market and to allow time for potential recovery.
Developers’ constrained ability to sell assets, the rise in impaired loans, and cautious bank behaviour collectively point to a sector navigating heightened debt repayment risks amid an extended commercial property downturn.
Reuters
