The furore over alleged construction defects at luxury development One Stanley threatens to cast a shadow over Hong Kong’s recovering super-prime property market, as banks hold off on mortgages and property agents suspend viewings at the complex while an investigation continues.

“Most [banks] are adopting a wait-and-see approach,” said Eric Tso Tak-ming, chief vice-president at mReferral Mortgage Brokerage Services, adding that lenders were likely to take a more cautious approach to mortgage applications at the development while the investigation was under way.

Loan approvals would be assessed on a “case by case” basis, said a banking industry source, adding that lenders would look at whether buyers had a high net worth or were otherwise considered reliable customers.

A property agent handling sales at One Stanley, who spoke on condition of anonymity, said their company had suspended viewings at the development unless clients proactively requested a visit.

The agency had yet to receive any further explanation from developer K&K Property about the status of One Stanley, the agent added.

One Stanley, a collection of luxury houses and flats on the southern side of Hong Kong Island, was thrown into disarray over the weekend when the government announced it was launching an investigation into work quality issues at the development. Buyer interest has not completely disappeared, however.

Louis Ho Siu-tong, a senior associate director at Centaline Property covering The Peak and Southern district, said agents received three to four requests for viewings over the weekend. The developer had made no new arrangements regarding viewings, he said.

The mixed response comes amid a rebound in Hong Kong’s “super-prime” residential market, with transactions for homes worth at least HK$100 million (US$12.75 million) accelerating in recent months as mainland Chinese buyers return to trophy assets in areas such as The Peak, according to Centaline Property.

One Stanley has been part of that recovery. Since January, 27 properties – including 11 houses and 16 flats – have been sold at the development, transaction records show. A Mongolian mining family bought a house for HK$247 million in January, while another house sold for HK$151.08 million in July.

The Building Department’s investigation relates to allegations that one house at One Stanley had up to 75 per cent fewer steel bars in some areas than specified in the approved construction plans.

The department has asked K&K Property to investigate whether similar problems exist elsewhere in the development and said it would conduct random inspections of selected properties. Concern is spreading among professionals involved in property transactions.

Polly Chu, a partner at law firm Hugill & Ip who focuses on property transactions, said concerns over safety and structural defects were expected. She was organising a seminar to gather views from authorised persons, bankers, valuers and dispute-resolution specialists, which may help “clarify their rights” and clear their doubts, she added. K&K Property did not respond to requests for comment.

One property industry executive described the incident as an isolated case, saying Hong Kong had few comparable examples.

The latest sale at One Stanley wased on September 30, two days before online property news platform WuChatProp first reported the alleged construction defects.

One Stanley comprises 32 detached houses and 11 low-rise blocks containing 50 flats. Transaction records show 13 flats and 10 houses remain available for sale.

Albert Luk, a representative of the owner of the affected house, said he did not rule out the possibility that more owners could come forward after the authorities release their findings.

Raymond Cheng, a veteran property analyst and research director at Mingze Capital International, said the incident would create “short-term noise” but he expected its impact on luxury home sales to be limited because K&K was a relatively small developer.

“The issue may lead to buyers being more selective or preferring to buy units from traditional big developers rather than small developers, who may need to offer lower prices to attract buyers,” Cheng said.