Tycoon Buys Jiayuan’s Hong Kong HQ at 34% Off

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

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

Jiayuan sold the 14th-floor office in the 39-storey tower to Gradual Development Ltd, a company controlled by Matthew Cheung, in mid-June, according to a Land Registry document retrieved this week. The 25-year-old Cheung is an executive director of Cheung & Sons, a multinational construction materials maker and property investor founded by his father, Kenny Cheung.

Cheung paid roughly HK$28,875 ($3,678) per square foot for the 3,290 square foot (306 square metre) strata title asset at the junction of Queen’s Road Central and Ice House Street — a sizeable dip in price for space at the 1991-vintage tower developed by Hongkong Land, where a high zone floor sold for a citywide record HK$60,000 per square foot in 2018. During that same year a mid-level floor in the building sold for HK$43,662 per square foot — making this most recent sale a nearly 34 percent mark-down from the price seen in 2018.

“I would say the transacted price was not surprising because we have been aware of and have recorded big price drops in a few Grade A office deals in the past two years,” Peter Ho, head of commercial sales for Hong Kong at Knight Frank, told Mingtiandi on Monday. “The 9 Queen’s Road Central transaction aligns with the percentage of those price dips and tells us that the office sales market is still very weak and that purchase demand is running at a very low level.”

Distressed Sale

Debt-saddled Jiayuan, which still lists it office address as 9 Queen’s Road Central, has sought to boost liquidity in recent months, including by selling out of its stake in a property management subsidiary, as the developer chaired by Shum Tin Ching struggles to make good on several sets of offshore bonds coming due 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 percent discount to the asking price and a mere 1.5 percent markup from the HK$93.6 million that Jiayuan paid for the asset nine years ago.

The disposal showed other symptoms of a distressed sale: according to HK01, Jiayuan in March had taken out a mortgage against the suite, with Matthew Cheung reportedly lending the unknown amount.

Knight Frank’s Ho likened the steep markdown on the unit to other strata deals witnessed in Central — such as the American Chamber of Commerce selling its offices in the Bank of America Tower at a 20 percent discount to the asking price in late 2020 — but he cautioned against reading too much into a single transaction.

“I do not see there will be many panic sales, and I think the market is bottoming out slowly,” Ho said. “Once more positive news is coming, the office price will be driven back…