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Developer of Hong Kong micro flats Jiayuan gets closer to liquidation after buyers shunned parking-space-sized homes

In Business
January 11, 2024

Jiayuan International Group, the developer of Hong Kong flats so small they inspired the coining of the term “micro flats”, is inching closer to its corporate demise after record interest rates weighed on its debts following poor sales of its minuscule apartments.

The Nanjing-based developer lost a winding-up case over a HK$14.5 million (US$1.85 million) debt in Hong Kong last May. It said in a filing on Thursday that the Hong Kong High Court appointed Derek Lai Kar-yan, Ivan Chan Man-hoi and Cato Hau Kai-ling of the firm Deloitte Touche Tohmatsu as its liquidators, taking over from a provisional liquidator appointed at the time of the decision.

The company’s shares were first suspended in May 2022, but resumed trading a month later, only to be suspended again in April 2023.

Jiayuan, founded by Shum Tin-ching, made a splash in 2019 with the launch of an apartment tower called T Plus in Tuen Mun. Some of the flats measured 131 sq ft – smaller than a standard Hong Kong car-parking space – and were priced at HK$2.85 million. At the time, the micro apartments were among the cheapest newly built homes available in Hong Kong, which has been the world’s least affordable urban centre since 2011, according to US-based think tank Demographia.

Shum Tin-ching, chairman of Jiayuan International, pictured at a results briefing in March 2019. Photo: Dickson Lee
Despite the initial buzz, the project failed to sell, and Jiayuan ended up discounting its catalogue price by as much as 37.6 per cent to clear its inventory. Analysts at the time suggested this meant little or no profit from the project.

In the first half of 2022, Jiayuan’s net profit fell 75 per cent to 536 million yuan (US$74.6 million) compared with the same period in 2021, according to its latest financial report. Sales fell 59 per cent to 19.13 billion yuan.

At the time, the group had a land bank of 16.6 million square metres in the Yangtze River Delta Area, the Guangdong-Hong Kong-Macau bay area and in Shandong Province.


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In August 2022, the company sought to restructure US$1.17 billion in debts, or 90 per cent of the outstanding principal amount of its maturing US$1.3 billion in debts at the time, according to the financial statement.

“As a non-state-owned real estate enterprise that has been one of the outstanding enterprises in the ‘three red lines’ assessment since 2020, the company, under the current liquidity crisis faced by the real estate industry in China, has chosen to actively manage its outstanding debts by way of the exchange offer,” the company said.

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