There’s more than meets the eye in ‘record’ HK$2.1 billion home purchase by mainland tycoon in exclusive The Peak district
Chen Hongtian has garnered international attention and boosted his profile on the mainland
Tycoon bought record HK$2.1 billion house on the Peak because his HK$380 million property in Mid-level was ‘too tiny’.
SCMP, June 8
What a perfect storyline to have in China’s game of fame. Buyer Chen Hongtian - one of the country’s thousands of billionaires - has finally made himself a household name.
Thanks to the media spin he has enjoyed over the week and the scarce information available on the complexity of the transaction.
On Monday morning, listed developer Chuang’s Consortium International said it’s negotiating a sale of the house at The Peak. That afternoon, the price tag and buyer were leaked to the press. On Tuesday, Chen was interviewed and then Chuang’s chairman Alan Chuang Shaw-swee on Thursday.
The HK$220,000-per-square-foot price made the headlines for almost a week not just in Hong Kong but also mainland China; so did Chen.
The public had no idea that his house purchase has strings until the seller’s announcement on Friday morning.
It was in fact part of a conditional agreement under which Chen is to sell a property to Chuang’s at the same time. Its implication on the claim of record price is significant.
Is Chuang’s also buying from Chen at a record high price? How much will Chen end up paying Chuang’s? Are the two deals conditional on each other?
Besides, is Chuang’s going to offer Chen generous payment terms given its long association with Chen?
In July 2013, the pair co-invested in Shenzhen Harmony Investment Funds. Chen is its deputy chairman with an undisclosed investment. Chuang’s chipped in HK$100 million for a 3.8 per cent stake and its chairman is one of the 11 directors, according to the funds’ website.
Chuang’s has been generous to its buyers. In 2013, it sold a shop in the lanes of Hung Hom for HK$220 million but was paid only 28 per cent so far.
This March, it loaned the buyer HK$157 million to complete the transaction. The sum will be repaid over 12 years.
In short, is the money on the table? That question would have killed any spin had the public known the house sale has strings.
How can Chuang’s not tell when its chairman and Chen have been blaring about the deal? Isn’t it a developer earning only HK$526 million last year and the HK$2.1 billion home sale a discloseable and substantial transaction by all thresholds under the Listing Rules?
An easy explanation will be that the agreement was not signed until Thursday. That is right. Nothing to disclose when there is no contract.
Given all the attention, it would be surprising if the regulator is not questioning the two parties and the upcoming disclosure will carry few details.
The irony is all of these would matter little in China’s fame game, once the record high home purchase has made it to the front page and Cheng was coined a tycoon.
The ex-ping pong coach is now a known face.
In a community that is long on money and short on credibility, fame works like magic. The success of Hui Ka-yan is telling.
Despite a gearing ratio of about 300 per cent, his empire Guangzhou Evergrande has been able to unload 75 billion yuan (HK$88.7 billion) of perpetual bonds to the country’s new rich , thanks to the fame of its chairman Hui Kayan.
“He has turned a soccer team from a loser to an Asian champion,” said a mainland banker “He is a hero in the eyes of many clients. That helps to sell.”
One may find it hard to understand. Anyway, between the championship in 2011 and 2015, Evergrande’s assets has ballooned by 25 times, making it a national brand.
Chen has been working hard to follow Hui. He has been quoted by the media on various issues and he also donates to charity
His recent move is a long article telling celebrity-cum-businessman Wang Shi to “get lost” if he’s not happy with China Vanke’s new shareholder.
He has finally made it with a public display of wealth, in a more tasteful way than the five kilograms of gold bracelet placed on a daughter by a county entrepreneur.
The fame comes on top of a prestigious home that cannot be easily confiscated by the mainland authorities and can be sold at any time.
It is not a bad deal.