Hong Kong property bets grow as private credit fund plans to double investment

[HONG KONG] A Hong Kong-based private credit fund aims to double its lending into distressed opportunities in the city, adding to a growing list of money managers positioning for further recovery after the deepest property slump in decades.Blue Mountain Bridge Capital Opportunities Fund expects to increase its invested capital from US$75 million to US$150 million by the end of 2026, a source familiar with the matter said, asking not to be identified speaking about private matters. The fund is run by Raymond Chan, who was previously co-head of Oaktree Capital Management’s Asia distressed debt business.That would be the latest sign of confidence in the city after news last week that Blackstone was in advanced talks to become the single largest shareholder of major Hong Kong developer New World Development, which bounced back from the brink of default last year. Other bullish signs on Hong Kong property have been emerging. Developer profits have likely bottomed, a JPMorgan Chase analyst forecast last month. Home prices in Hong Kong rose 3.25 per cent in 2025, the first annual gain in four years.At the same time, the commercial real estate sector remains under pressure, offering opportunities for lenders willing to take more risk. Investors continue to concentrate on high-quality assets in core districts such as Central and Causeway Bay, while office buildings in other areas face ongoing leasing challenges.“Hong Kong property is bottoming out, but there are still quite a few distressed and special-situation opportunities,” Chan said. “I’m looking at lending on buildings valued below land value.”His fund is dedicated to special-situation senior secured lending deals in Asia, with a primary focus on Hong Kong. Such loan investments have included one backed by a luxury residential property, and another secured by a newly converted commercial property. The fund has recently signed a facility agreement to provide a senior acquisition loan secured by a hotel in Hong Kong.The fund delivered unspecified double-digit returns after fees in 2025, according to a letter sent to investors last week, seen by Bloomberg News, which said the annualised gross return on invested capital was at least 15 per cent.Hong Kong’s commercial real estate slump remains severe, with office prices down roughly 50 per cent from their peak. That has eroded collateral values backing many property loans, causing losses for banks when borrowers default.The Blue Mountain Bridge Capital fund is currently exploring several distressed acquisition financing deals and is in advanced talks with a few Hong Kong commercial banks to buy their non-performing loans backed by real estate assets in the city, according to the letter. BLOOMBERG