Mainland property developer Jiayuan International is venturing into Hong Kong’s residential market by buying a majority stake in three projects from Tang Shing-bor for a combined HK$2.62 billion ($334 million).
According to a statement to the Hong Kong stock exchange, the Jiangsu-based builder is joining with the local tycoon to set up a joint venture company that holds residential project T-Plus, as well as a pair of industrial buildings on San Hop Lane and Success Centre in the New Territories. Jiayuan is picking up a 70.1 percent stake in the company, while Tang will retain the remaining 29.9 percent.
Since listing on the Hong Kong Stock Exchange in 2016, the Jiayuan has “been striving to identify strategic cooperation partner proactively and seeking opportunities to enter into the Hong Kong property market,” Jiayuan said in a filing to the stock exchange regarding the deals.
“Leveraging on its first-mover advantage processed after deeply rooted in Hong Kong for years, as well as the group’s development strategy of expanding its presences in the Guangdong-Hong Kong Macao Greater Bay Area, the collaboration of the three above mentioned projects represents an opportunity for the group to enter into the Hong Kong real estate market,” the company added.
Mainland Developer Moves into Hong Kong
Under the agreement, Tang is selling to Jiayuan his 70.1 percent stake in the 7th to 12th floors and 15th to 21st floors, the clubhouse on the third floor and the plant and machinery room on the 6th floor of the residential space, in T-Plus, a mixed-use project at 2 Tsing Min Path in the western New Territories area of Tuen Mun.
The investor known as Hong Kong’s “shop king” will keep for himself the commercial portion of the 148,000 square foot (13,750 square metre) project, which is comprised of a shopping centre and car park. The residential portion is expected to yield 356 units when construction is complete.
Originally developed by Asia Allied Infrastructure and Excel Billion Corporation as homes, the property was sold to Tang in July last year for HK$1.2 billion. The property investor previously planned to convert the project into senior housing but his son Stan Tang told the media that the precise development plan will be discussed with Jiayuan.
Although Tang has still not closed on his acquisition of T-Plus, Jiayuan has now agreed to pay its new Hong Kong partner HK$271 million to compensate for deposits already paid for the property along with a premium. Jiayuan is expected to pay an additional HK$658 million once Tang completes the acquisition of the Tuen Mun project.
Jiayuan Snaps up Redevelopment Projects
The Shop King is also unloading stakes in a pair of industrial buildings located at 1 and 3 San Hop Lane, Tuen Mun for HK$1.75 billion to Jiayuan. The pair of buildings, which cover a combined 290,000 square feet, will be converted into a 28-storey office building and a 10-storey commercial building with restaurants, retail shops, office space, private clubhouse and car parks respectively.
In addition, the Jiangsu-based developer is purchasing a 70.1 percent interest in the 29-storey Success Centre for HK$596 million. Tang bought the 240,485 square foot industrial building at 26 to 38 Ta Chuen Ping Street in Kwai Chung from a company jointly owned by Hanison Construction and a subsidiary of PAG for HK$1.04 billion ($132 million) late last year. The property is now being converted into a commercial building comprising restaurants, office space and retail shops.
Ranked as the 152nd developer in China in terms of sales in 2017, Jiayuan International engages in residential projects and integrated commercial projects primarily in the province of Jiangsu north of Shanghai. The Hong Kong-listed mainland developer has a market capitalisation of HK$38 billion.