Tycoon buys Jiayuan Hong Kong headquarters at 34% off

Suite 1403 at 9 Queen’s Road Central reportedly sold for 15.2% below asking price

A scion of the family behind Hong Kong conglomerate Cheung & Sons has taken over a 14th-floor unit at 9 Queen’s Road Central, snapping up the headquarters of struggling mainland developer Jiayuan International Group for HK$95 million ($12.1 million). of dollars).

Jiayuan sold the 14th-floor office of the 39-story tower to Gradual Development Ltd, a company controlled by Matthew Cheung, in mid-June, according to a land registry document retrieved this week. Cheung, 25, is executive director of Cheung & Sons, a multinational building materials manufacturer and real estate investor founded by his father, Kenny Cheung.

Cheung paid approximately HK$28,875 ($3,678) per square foot for the 3,290 square foot (306 square meter) stratum title asset at the junction of Queen’s Road Central and Ice House Street – a significant drop from the space prices at the 1991 tower developed by Hongkong Land, where an elevated area floor sold for a citywide record of HK$60,000 per square foot in 2018. During the That same year, a mid-level floor in the building sold for HK$43,662 per square foot – making this most recent sale nearly 34% off the price seen in 2018.

“I would say the negotiated price was not surprising as we have been aware of and have experienced significant price declines in a few Class A office transactions over the past two years,” said Peter Ho, Head of Commercial Sales for Hong Kong at Knight Frank, Mingtiandi said on Monday. “The 9 Queen’s Road Central transaction aligns with the percentage of these price reductions and tells us that the market for office sales is still very weak and that buying demand is at a very low level.”

Distressed sale

Indebted Jiayuan, which still lists the address of its office at 9 Queen’s Road Central, has sought to boost its cash in recent months, including by selling its stake in a property management subsidiary, as the developer chaired by Shum Tin Ching struggling to do well on several sets of offshore bonds maturing over the next year.

Matthew Cheung of Cheung & Sons

Jiayuan had put Suite 1403 at 9 Queen’s Road Central on the market for HK$112 million, asking HK$34,236 per square foot, online news portal HK01 reported. But the actual sale price of HK$95 million represents a 15.2% reduction from the asking price and a mere 1.5% markup from the HK$93.6 million Jiayuan paid for the sale. active nine years ago.

The disposal showed other symptoms of a hard sell: According to HK01, Jiayuan in March had taken out a mortgage on the suite, Matthew Cheung loaned the unknown amount.

Knight Frank’s Ho compared the unit’s steep markdown to other strata deals seen in the center – such as the American Chamber of Commerce selling its offices in the Bank of America tower at a 20% discount from the asking price end of 2020 – but he cautioned against reading too much in a single transaction.

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“I don’t see there will be a lot of panic selling, and I think the market is slowly bottoming out,” Ho said. “Once more positive news comes in, office prices will come back up quickly.”

Tycoon in training

Representing the second generation of his family business, Cheung serves as Managing Director of Causeway Education Group, a premium learning center under the Cheung & Sons umbrella.

Cheung started his first business venture, Prime Mandarin, at age 19 as a university student at the London School of Economics and Political Science, where he saw an opportunity at the time to provide affordable Chinese teaching solutions. to publicly funded schools, according to a company biography.

The mogul-in-training flexed his real estate muscle in June 2019, when the 22-year-old shelled out HK$916 million ($117.3 million) for an 8,674-square-foot home at the exclusive Mount Nicholson on The Peak.

The local aristocrat made the high-end home purchase following massive protests over the Hong Kong government’s controversial extradition bill, with analysts pointing to a luxury real estate market held back by poor feeling.

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