Posted on 02 September, 2019 | By Property852
Hong Kong Apartments are renowned for being small, however these "micro flats" are taking things a step further.
Jiayuan International , the property developer from mainland China, is developing the smallest micro flats in the history of Hong Kong apartments. These micro flats with an area of 128 square feet have an area which is less than that of a car park. However, the developer claimed that the microflat project remained profitable even after prices were reduced in July by about 38 % and units were sold at a low price of US $220,514 or HK$1.73 million. In May 2018, the Chinese developer had acquired a stake of 70.1% in the micro-flat Tplus project from Tang Shing-bor, a retail magnate from Hong Kong, after paying HK$657.5 million.
Along with Tang, Jiayuan International had sold 339 units in the project for a revenue of HK$1.1 billion. If the interest and marketing expenses were excluded, the profits generated by the joint venture were approximately HK$115 million. The executive director of the Chinese developer, Cheuk Hiu-nam, who is also holds the position of the company secretary jointly, held a briefing in Hong Kong to announce the financial results. He claimed that though the developer was offering discounts to buyers who paid earlier, it had also increased the prices of some Hong Kong apartments. Hence the profit for the project is similar to what was expected initially, and price changes did not have much impact on the profit.
For the six month period which ended on June 30, according to the results filed with the stock exchange of Hong Kong, the Chinese company indicated a net profit of 1.06 billion yuan, which was an increase of approximately 22.7 percent. Though last year the company had recommended an interim dividend of 10 HKcents, this year no interim dividend was recommended. Hence share prices closed at HK$3.25, a reduction of 1.5 percent. Cheuk claimed that the project was good investment since they recovered almost all expenses, reasonably quickly. He said that the short project cycle was appreciated. They had finalized the joint venture with Tang in July 2018, and almost all the flats were sold in a year.
Cheuk said that the company had already made approximately HK$1.1 billion, so it would not selling the eight specially designed Hong Kong apartments that remained on the higher floors in a hurry. A tender would be floated to sell them at a good price. Though the company was not very familiar with the Hong Kong market, chairman of Jiayuan International, Shum Tin-ching claimed that the company would continue to invest and partner with the local developers. Cheuk said that the joint venture with Tang was satisfactory, and the company wanted to deal with experienced developers.
In other real estate news, another developer from mainland China headed by Hui Wing-mau, Shimao Property Holdings reported that the profit for the first half of the financial year had increased to yuan 5.31 billion, a 20.6% increase annually.