- Hong Kong developer Goldin Financial has backed out of its purchase of an airport redevelopment site worth 11.1 billion Hong Kong dollars (U.S. $1.4 billion), citing "social contradiction and economic instability," as China's trade war with the U.S. heats up, according to the South China Morning Post.
- Goldin was the winning bidder for the right to purchase a piece of runway at Kai Tak International Airport, which served as Hong Kong's primary airport until 1998. In rescinding its offer on the property, Goldin has forfeited a deposit of approximately $3 million and has walked away from a commercial investment of up to HK$18 billion (U.S. $2.3 billion).
- In a conference call announcing the action, one company representative said that "the decision came after accessing the short- to mid-term impact of the trade war," as well as how other current social factors could impact the hotel and office markets. The property, one of five available sites at the airport, allows for more than 860,000 square feet of gross floor area and would have included hotel, retail and office projects.
Analysts familiar with the Hong Kong market told The Morning Post that conditions haven't changed since Goldin submitted its May bid and suggested that it could have been the "aggressive" nature of the bid that has caused the company to reconsider.
As The Morning Post noted, however, this is the first major commercial deal in Hong Kong to go south since President Donald Trump imposed tariffs on $200 billion worth of Chinese goods. The administration has also floated the possibility of levying a 25% tariff on an additional $300 billion of the country's imports into the U.S. this summer.
These latest tariffs are in addition to the extra duties on steel (25%) and aluminum (10%) that the administration imposed in March 2018. Since then, the White House has lifted the extra tariff on steel and aluminum from Canada and Mexico as long as those two countries guarantee that they will prevent Chinese material from making its way into the U.S.
China was already dealing with an economic slowdown when the tariffs hit, as evidenced by trouble on some of its U.S. construction projects. After a brief burst of activity in March, for instance, construction has, once again, reportedly come to a standstill on the $1 billion Oceanwide mixed-use project in downtown Los Angeles. Developer Oceanwide Holdings is reportedly trying to find additional capital to sink into the project. In the meantime, mechanics liens filed by unpaid contractors on the project were almost $100 million at last tally.