300 investors, including 30 from Hong Kong, lose 400 million yuan as mega Zhuhai mall project stalls
- Developer of half-built 690,000 sq ft shopping centre promised lucrative returns for shop tenants before plans fell apart
About 300 people from Hong Kong, Macau and mainland China have lost a total of 400 million yuan (US$59 million) after plans for a huge shopping mall in nearby Zhuhai allegedly fell through.
The investors were sold shop space by developer Zhaohong Shengshi Industrial Company, which had started to build a 690,000 sq ft shopping centre in the city’s Xiangzhou district.
According to the Hong Kong Federation of Trade Unions (FTU), which has been helping about 30 local victims, the developer used a separate company to persuade buyers to part with their money.
The subsidiary allegedly had them sign a rental agreement by promising lucrative returns. But many claimed they had received little.
The union said the Hong Kong victims had been cheated out of 20 million yuan all together.
“Since the opening of the Hong Kong-Zhuhai-Macau Bridge, real estate agents and other companies have been actively trying to persuade Hong Kong buyers to invest in commercial property, promising a high profit. But unfortunately many end up falling into a trap,” said Poon Chi-fai, director of the Zhongshan branch of the FTU’s mainland service centre.
Poon said the buyers had no way of getting their cash back because the project had fallen through, while the subsidiary they signed the agreement with was a shell corporation – a firm with no significant assets used as a front to obtain financing or evade tax.
Poon said the union had also been dealing with victims from nine other similar property schemes in the Guangdong cities of Zhuhai, Zhongshan and Jiangmen.
Such cases were a growing phenomenon in southern China, he said, with foreign investors keen to cash in on property projects in an effort to ride growth expected from the government’s “Greater Bay Area” scheme. Beijing wants to link Hong Kong, Macau and nine nearby Guangdong cities into an economic and innovation hub to rival Silicon Valley in the United States.
One victim, who only gave his name as Wilson, said he was facing losses of more than 650,000 yuan after buying a shop unit for 690,000 yuan in 2014.
“They promised me I would receive 50 per cent of what I invested back in five years’ time. But I only received the first annual payment in 2017, and I haven’t gotten any more money since,” the 42-year-old said.
The mall was supposed to open its doors to customers by 2015, but construction was halted and photos show only a concrete frame has been built.
“The developer told us they did not have any money and were dealing with financing problems. We’ve been chasing them, but they just keep dragging it out,” Wilson said.
The company’s general manager, Gan Xianmiao, did not deny the episode when contacted by the Post, but would only say the matter was being handled by the relevant authorities.
“Meetings are being held. I’m not in a position to comment on this,” Gan said.
The union said the case did not constitute a scam, but victims claimed the developer’s intention was to flee with their money and that it had violated their contracts.
It urged the Hong Kong government to liaise with mainland authorities on how to better prevent investment scams, and to raise awareness given the lack of knowledge of mainland laws.