'Micro home' developer says it will relaunch stalled Tuen Mun project next month

By Lam Ka-sing kasing.lam@scmp.com / https://www.scmp.com/business/companies/article/3003564/micro-home-developer-says-it-will-relaunch-stalled-tuen-mun?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | April 1, 2019 6:37 PM SGT
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.
Shum Tin-ching, chairman of Jiayuan International, spoke at the mainland developer's results briefing on Wednesday.Photo: Dickson Lee
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.
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