Primavera’s founder splashes US$55 million on Hong Kong mansion after year of blockbuster deal making

·5-min read

Fred Hu, the former Goldman Sachs banker who founded one of China’s most active private equity firms, has splashed out on a mansion in Hong Kong following a blockbuster year of deal making, continuing the trend of wealthy mainland Chinese buyers snapping up prized real estate in the city.

The founder of Primavera Capital Group paid HK$428 million (US$55 million) for House 3 at 45 Tai Tam Road, located between the American Club and the Turtle Cove Beach near Stanley in the south-eastern corner of Hong Kong Island, according to Land Registry records.

The 4,775-square foot (444 square meters) mansion, one of seven developed by Tania Development Limited, features a basement car park, three stories above ground with a roof terrace, a lawn and an infinity pool looking out into the South China Sea, according to the developer’s brochure. Hu, who turns 58 next month, paid HK$89,634 per square foot for the property, and another HK$18.19 million in tax as a first-time homebuyer in the city, where he is a permanent resident.

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“Many of those who come to Hong Kong are bankers, or [executives of large technology companies] like Alibaba,” said Centaline Property Agency’s senior regional sales director Eric Lee. “Those who do fundraising really made a lot of money, especially in the past few months.”

Plan of 45 Tai Tam Road, featuring House 3. Photo: Tania Development Limited
Plan of 45 Tai Tam Road, featuring House 3. Photo: Tania Development Limited

The vast majority of the most noticeable, big ticket real estate transactions in Hong Kong over the past 10 years featured buyers with names spelt in pinyin, the romanisation system used in mainland China, said Lee. There has been a high number of migrants from mainland China since the 1997 handover, so “even if only 1 per cent of them” bought these mansions, that’s still a lot of transactions, he said.

More than HK$15 billion worth of luxury home sales, involving abodes of at least HK$100 million each, changed hands this year in Hong Kong, according to Lee, underscoring how the ultra-wealthy continue to defy the city’s worst recession on record.

View from 45 Tai Tam Road. Photo: SCMP
View from 45 Tai Tam Road. Photo: SCMP

The upscale apex of Hong Kong’s property has seen record-breaking transactions, as the city’s economy and the overall market recovered from the coronavirus pandemic. A house on The Peak, Hong Kong’s most exclusive address, was reportedly rented out this month for a record monthly rent of about HK$1.6 million.

In February, CK Asset Holdings sold a five-bedroom flat at 21 Borrett Road for an Asian record of HK$459 million on a per-square-foot basis, to a Hong Kong permanent resident with Chinese pinyin name. That same month, a Wharf Holdings-led consortium won a residential plot on The Peak for a record price by square feet in Hong Kong.

Chen Ying, whose name is spelt in pinyin, paid HK$467 million earlier this month for a 5,630-sq ft villa at 90 Repulse Bay Road, according to Land Registry records.

Bedroom at 45 Tai Tam Road. Photo: SCMP
Bedroom at 45 Tai Tam Road. Photo: SCMP

Hu, an independent non-executive director at SCMP Group Limited - the publisher of this newspaper - from 2010 to 2016, did not respond to requests for comment.

Before establishing Primavera in 2010, the Tsinghua University-trained engineer and Harvard doctorate holder in economics was chief China economist and executive director of Goldman Sachs Asia, where he rose to Greater China chairman over a 13-year tenure.

He worked at the International Monetary Fund, lectured at Tsinghua as well as the Communist Party School, and advised the Chinese government on debt restructuring.

View of the interior of 45 Tai Tam Road. Photo: SCMP
View of the interior of 45 Tai Tam Road. Photo: SCMP

He previously sat on the Hong Kong government’s Strategic Development Committee and the Advisory Committee for the Hong Kong Securities and Futures Commission. He still sits on the board of the Industrial and Commercial Bank of China (ICBC), one of the country’s largest state-owned banks.

Primavera is one of the most active private equity firms in China, with US$2.9 billion of assets under management in 31 active investments across five funds, according to Bloomberg’s data.

The company took over the KFC and Pizza Hut chains from Yum! Brands in 2016, packaged them into Yum China Holdings and listed them in New York and Hong Kong. Yum China raised HK$17.3 billion in a stock sale last year in Hong Kong.

Lufax Holding Limited, in which Primavera was an early investor, raised US$212.7 million last October in a New York initial public offering (IPO).

Primavera is also an early investor in several of China’s most valuable companies, including the world’s first US$100 billion start-up ByteDance, and Ant Group, the fintech affiliate of this newspaper’s owner Alibaba Group Holding.

Dining room at 45 Tai Tam Road. Photo: SCMP
Dining room at 45 Tai Tam Road. Photo: SCMP

Another factor drawing Chinese buyers to Hong Kong is the difference in currency value and tax rates with the mainland.

“If you have a Hong Kong identity card, the difference in tax rate and the lack of inheritance tax or value-added tax” make investing in the city’s real estate “really attractive,” Lee said. “We often remind them that buying a HK$500 million house is not like spending, but like making a time deposit. They very much buy this idea.”

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