‘Micro home’ developer says it will relaunch stalled Tuen Mun project next month
- •Jiayuan International, developer of the 356-unit T Plus, may slash prices by up to 15 per cent in April relaunch, analysts say
Mainland developer Jiayuan International says it will relaunch its “micro home” residential building in Tuen Mun around the middle of April, offering few details apart from a pledge to give homebuyers a “surprise” in the project, which remains 99 per cent unsold.
Analysts said prices at the 356-flat T Plus, which is slated for completion in September, might be slashed by up to 15 per cent.
Of 27 flats on offer only two were sold during a marketing launch on December 8, as the project competes with a high volume of new supply in Tuen Mun.
The project featured homes in layouts as small as 128 sq ft priced from around HK$2.85 million (US$363,291).
“The time of launch … will be as soon as possible. As soon as when we make the launch, you will have a surprise,” said Alex Kwong, project general manager at Jiayuan.
Kwong said T Plus suffered from an ill-timed release of new flats, adding that a chill descended over the city’s housing market such that “no project sold very well”.
On Wednesday, Jiayuan reported 2018 profit surged 32.5 per cent to 1.46 billion yuan (US$217.15 million), while revenue jumped 37.5 per cent to 10.46 billion yuan
The company declared a final of 11 HK cents per share, bringing the full year dividend to 21 HK cents per share, a gain of 10.5 per cent on year.
Shares in Jiayuan dropped 4.2 per cent following the results announcement to close at HK$4.09 on Wednesday.
The relaunch comes as the Legislative Council’s housing panel plans to discuss a vacancy tax scheme on Monday.
If passed, completed vacant flats will be subject to a tax set at two times annual rates, or 3 to 4 per cent of valuation.
Analysts said Jiayuan would need to consider its project costs and the price of comparable projects in the same area ahead of the relaunch.
“It needs a price cut of a minimum 10 per cent, especially since it is a small developer,” said Raymond Cheng, head of Hong Kong and China research and property at CGS-CIMB Securities. “Mortgage plans with relatively high loan-to-value ratios are also possible but a price cut is more direct.”
The first batch of units in the project were priced at an average of HK$16,937 per square foot, a record for a new project in Tuen Mun.
In contrast, Vanke Property (Hong Kong)’s Le Pont project in Tuen Mun sold all 347 flats on offer at an average price of HK$11,073 per square foot during an initial sale in October.
Jiayuan bought a 70.1 per cent stake in T Plus from veteran investor Tang Shing-bor for HK$2.62 billion on May 24 last year, or HK$8,790 per square foot.
Shares in Jiayuan have yet to recover significantly from a major sell-off on January 17, when they tumbled 80.6 per cent to close at HK$2.52.
The share was suspended on January 22 after a filing revealed that chairman Shum Tin-ching and his wife Wang Xinmei sold a combined 93.62 million shares on the day of the crash at an average price of HK$2.70.
The share resumed trading on January 30.
