Hong Kong investors pressure UK developer to make good on quarterly 'guaranteed' returns pledge

By Lam Ka-sing kasing.lam@scmp.com / https://www.scmp.com/property/international/article/3007389/hong-kong-investors-pressure-uk-developer-make-good?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | April 30, 2019 4:15 PM SGT
Several Hong Kong investors are among an international group of more than 100 seeking redress from a UK property developer they say has fallen behind in quarterly payments on guaranteed ­returns on property investments.
According to several of the ­investors, developer and manager A1 Alpha Properties (Leicester) stopped paying them rental ­returns after mid 2018 on their investments in student quarters and holiday homes in Britain.
They said they were entitled to receive guaranteed and fixed returns of about 10 per cent for 10 years.
A1 Alpha was placed into ­insolvency in February at the ­request of investors. According to business advisory firm Quan­tuma, appointed to handle the insolvency, the case involves 2,160 units and 1,377 investors across 20 projects in the country.
According to seven investors contacted by the Post, the student quarters projects included College Street Village in Leicester and Scholar's Court in Bradford, while there were also six holiday home projects, including ones at Westbeach in Devon and Green Park in Ilfracombe.
The properties, which cost about £50,000 (HK$510,000) each on average, were marketed by UK-based agency Emerging Property and developed and managed by companies related to A1 Alpha.
Sales literature seen by the Post ­referred to a number of projects, including College Street Village and Scholar's Court as offering "fixed returns of 8 to 10 per cent for 10 years".
Brian Hodgson, a 55-year-old auctioneer in Hong Kong, was one of the investors affected. He bought one unit in College Street Village and another at Scholar's Court after being attracted by the high "guaranteed" returns stated in emails sent to him.
He paid a total of £100,000 over two years to 2017, or £50,000 each on average, aiming at securing retirement income. He said he was guaranteed £1,010, or a 10 per cent yield, in pro-rated quarterly payments for each property.
Hodgson said he received a full payment in July 2018, and thereafter received a payment of £72.49 in January.
"Nothing in the contracts says they had the right to cancel ­payments," Hodgson said.
He said that a vote organised by Quantuma for May 14 would enable investors to vote on a number of options, including liquidation of A1 Alpha Properties or replacement of its management.
Emerging Property, Alpha Student Management " which manages most of the projects affected " and Quantuma did not immediately respond to requests for ­comment.
Brian Hodgson, owner of Hong Kong Auctions, says he has yet to receive 'guaranteed' quarterly payments on his UK property investments due in October and January. Photo: Xiaomei Chen
A statement on Quantuma's website earlier this month from law firm Trowers & Hamlins, which is acting on behalf of the investor group, said that it was clear that "without fundamental structural change to A1 Alpha's business, the arrears owing to investors would increase." It added that "investigatory work, the ­administrators' proposals and subsequent restructuring will all need to take precedence before future direct action can be taken".
Hodgson said he and at least nine other investors affected had reported the case to the Serious Fraud Office in Britain.
The Serious Fraud Office declined to comment on the case and referred questions to the Financial Conduct Authority. The agency did not respond to a request for comment.
Other affected investors come from Taiwan, the United Arab Emirates, Saudi Arabia and France.
Hong Kong's Estate Agents Authority (EAA) said it had ­received 15 complaints about properties situated outside Hong Kong last year, with four related to Britain. It did not give specific details or name any companies or projects.
"According to our record, Emerging Property is not one of our licensees," the EAA said.
"Consumers are advised to ­appoint licensed estate agents when purchasing non-local properties, as their conduct is regulated by the EAA."
Industry observers noted there have been previous cases of failed guaranteed returns related to student housing projects in Britain for at least the past five years.
Carrie Law, chief executive of property portal Juwai.com, said investors should avoid offers that seem too good to be true and only work with reputable companies, though student housing and guaranteed rental returns are not necessarily bad investments.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.