A time-honored Hong Kong property developer is downsizing to pay debts by selling its student dormitory assets to JD.com for 750 million yuan

A time-honored Hong Kong property developer that has been streamlining its balance sheet has offloaded another asset.

On July 6, Far East Consortium (00035.HK) announced that it plans to sell a Hong Kong hotel currently undergoing transformation to the buyer at an initial consideration of HK$750 million, with a sale and purchase agreement signed by both parties on July 3.

According to the announcement, the seller of this transaction is Dorsett Hotels Group Limited, an indirect wholly-owned subsidiary of Far East Consortium, and the transaction target is the 100% equity interest in Jie Cai Limited (referred to as "Jie Cai Company") held by Dorsett Hotels Group. Jie Cai Company is principally engaged in property holding business, and holds multiple land parcels including Kowloon Inland Lot Nos. 7429, 9701, 9705, 9727, 9769 and 9944.

The buyer of this transaction is JD Fabulous Development XI Limited, whose ultimate beneficial owner is JD.com, Inc. (referred to as "JD").

Founded in the 1970s, Far East Consortium is a long-established Hong Kong property developer, founded by Deacon Chiu, a businessman with ancestral roots in Ningbo, Zhejiang, who built a vast property and hotel portfolio in Hong Kong and the Chinese Mainland. Currently, Far East Consortium is led by Chiu Tat-cheong, the second son of Deacon Chiu.

According to Far East Consortium's 2025 annual report, the property sold is the Silka Seaview Hotel (referred to as the "Silka Seaview Hotel") located at 268 Shanghai Street, Yau Ma Tei, Hong Kong. The official website of the hotel brand "Silka Hotels" shows that the Silka Seaview Hotel has a total of 268 guest rooms.

Affected by the previous downturn in the property market, this long-established developer has been actively reducing debt through measures such as asset sales. On the other hand, as a leading domestic internet giant, JD has frequently acquired assets in Hong Kong over the past few years, and now it has set its sights on the booming student dormitory investment sector.

The Veteran Hong Kong Player Keeps Selling, Cutting Debts by HK$10 Billion in Three Years

Against the backdrop of a widespread "bed shortage" among Hong Kong's tertiary institutions, the Silka Seaview Hotel launched its operational transformation in 2023, gradually converting some of its guest rooms into student dormitories for operation. At present, 76 guest rooms in the hotel project are still awaiting transformation, and according to the plan, the hotel will complete the conversion of all guest rooms into student dormitories in the second half of 2026.

Upon completion of the transaction, DHI Hotel Management HK Limited, another indirect wholly-owned subsidiary of Far East Consortium, will act as the project manager, responsible for its operation and management for a period of three years.

Far East Consortium has also provided a revenue guarantee for the project. During the three-year management period, the manager will pay a guaranteed income of HK$45 million to Jie Cai Company every year, totaling HK$135 million over three years. Regardless of the actual operating performance, the guaranteed income will be prepaid in cash on a monthly basis.

In terms of operating performance, the asset is still in a loss-making state. For the fiscal year ended March 31, 2025, Jie Cai Company recorded revenue of HK$253.82 million and a loss after taxation of HK$298.63 million. For the fiscal year ended March 31, 2026, revenue rose to HK$365.32 million, but a loss of HK$191.12 million was still recorded.

In recent years, the number of non-local students coming to Hong Kong for studies has grown rapidly, driving a sharp surge in accommodation demand. However, due to limited campus land, on-campus accommodation at Hong Kong's tertiary institutions, which was already in short supply, has continued to be tight, pushing students into the rental market. As a result, the Hong Kong student dormitory sector has witnessed an unprecedented investment boom.

Having already stepped one foot into this booming sector, why did Far East Consortium choose to sell the asset? According to the announcement, Far East Consortium's move is, on the one hand, to unlock the asset's appreciation value and realize the book value. Far East Consortium expects the transaction to generate a gain of approximately HK$423 million.

On the other hand, the move aims to improve its financial structure. Far East Consortium plans to use the net proceeds from this transaction to repay bank loans on a priority basis, with the remaining funds to supplement daily operating capital. According to the announcement, after repaying HK$630 million in bank loans, Far East Consortium can still retain HK$106 million in working capital.

Far East Consortium acknowledged that this move is a key part of the company's strategy to realize non-core assets for recycling investment.

Since fiscal year 2023, in the face of high debt pressure and the continued sluggish Hong Kong property market, Far East Consortium has made debt reduction its top priority, and has continuously recouped funds and reduced leverage through asset sales and other means.

According to incomplete statistics from Times Finance, over the past year, Far East Consortium has successively sold multiple hotel assets including Australian and British mortgage business companies, The Ritz-Carlton Perth in Australia, as well as the Plaza Damas commercial project in Malaysia.

Financial reports show that at the end of fiscal year 2023 (i.e., March 31, 2023), Far East Consortium's net debt was approximately HK$25.729 billion, with an adjusted net debt-to-equity ratio of as high as 73.8%. By the end of fiscal year 2026 (i.e., March 31, 2026), the company's net debt had dropped to HK$19.80 billion, with an adjusted net debt-to-equity ratio of 63.0%.

At the full-year results press conference held on June 26 this year, Chiu Tat-cheong, Executive Director, Chairman and Chief Executive Officer of Far East Consortium, stated that the Group had repaid approximately HK$10 billion in debt over the past three years, and its goal is to further reduce the net debt-to-equity ratio to below 50% within this year.

Internet Giant Seizes Hong Kong Assets at Bargain Prices, This Time Targeting Student Dormitories

Against the backdrop of a sluggish market, sellers in urgent need of deleveraging are accelerating divestments, while buyers with abundant cash are seizing the opportunity to acquire assets at low prices.

Last October, Alibaba and Ant Group acquired a total of 13 floors of office space at One Island East in Causeway Bay from Mandarin Oriental International Group for HK$7.2 billion, along with the right to use the rooftop signage and 50 parking spaces, with plans to establish dual headquarters there.

In April this year, DBS Bank (Hong Kong) announced that it intends to acquire an additional six floors of office space at Hong Kong's Central Centre, with a total gross floor area of 151,900 square feet, at a transaction price of HK$2.619 billion, equivalent to approximately HK$17,200 per square foot. The properties were previously privately owned by Xu Rongmao, founder of Shimao Property. In 2017, Xu Rongmao and co-investors acquired a 75% stake in Central Centre for HK$40.2 billion, at an average floor price of HK$33,000 per square foot at that time. The current selling price is nearly 50% lower than the acquisition cost.

JD has also been actively making moves in this wave of bargain hunting. At the end of 2024, JD Property Development, a subsidiary of JD, acquired the Li & Fung Centre, a logistics property located in Sha Tin, Hong Kong, for HK$1.8 billion (equivalent to US$232 million). In December 2025, JD further acquired a 50% equity stake in the China Construction Bank Tower in Central for HK$3.498 billion.

This time, JD is continuing to increase its exposure to the Hong Kong real estate market, but the target has shifted to student dormitories. Times Finance sent an interview request to JD regarding the reasons for choosing this asset class and its future investment plans in Hong Kong, but the company did not provide a comment.

In terms of returns, JD's investment logic in deploying student dormitories is clear. Against the dual backdrop of tight bed supply and demand and a sluggish property market, student dormitories offer the advantages of stable cash flow and relatively higher rates of return.

According to the "New Perspectives on the Student Accommodation Market" released by Knight Frank last November, the market yield of student accommodation in Hong Kong ranges from 4.5% to 5%, compared with 3.7% for traditional Grade A office buildings, and only 3.2% and 3.6% for small and medium-sized residential properties respectively.

Even after selling its existing student dormitory assets, Far East Consortium remains bullish on the long-term development of this sector. In the announcement, Far East Consortium stated that the transaction provides the company with an opportunity to establish a strategic relationship with JD Group and explore further cooperation opportunities, including potential student dormitory projects in Hong Kong.

This article is from the WeChat public account "Times Finance APP" (ID: tf-app), authored by Chen Zexuan, and published with authorization from 36Kr.