A Red Guard; a poet and philanthropist; even a mountain trekker. But Huang Nubo, founder of Beijing Zhongkun, was best known as a property developer with a taste for resort projects, including a failed bid to build a $200 million resort in Iceland in 2011 (the proposal was rejected by the Icelandic government, see WiC122).
At home Huang was most associated with his Zhongkun Plaza shopping mall in Beijing, which cost over Rmb4 billion ($597 million) to build before opening in 2010 after a series of delays.
When the project first broke ground in 2004, the mall was touted as the only large-scale commercial project directly linked to the capital city’s metro and the largest mixed-use urban development inside the Third Ring Road.
But last week, the shopping centre was back in the headlines, after Bytedance, the company behind the hugely popular short video app Douyin and news aggregator Jinri Toutiao, acquired the abandoned mall for Rmb9 billion from an asset manager that recycles failed projects.
Bytedance is reckoned to want to convert the facility for office use.
“News about Bytedance’s deal puts the boss behind the Zhongkun Plaza – Huang Nubo – back in the news. While rumours that he has gone bankrupt have long been circulating, there is no way to confirm that. What’s certain, however, is that Huang is a lao lai [people who don’t pay their debt],” says Huxiu, a portal.
Zhongkun Plaza seemed doomed almost from the start. In an interview with China Times, Huang explained: “We spent the first two years relocating around 3,000 families in the area and then SARS struck in 2003 and all the workers had to be sent home. When construction eventually began, it was suspended once again in preparation for the 2008 Beijing Olympics. Then 2009 brought the financial crisis, when most developers were short of cash. The 60th anniversary of the establishment of People’s Republic of China later that year halted the project once again.”
The timing continued to be unfortunate. By the time the mall finally opened e-commerce was taking off, and by 2013 Huang had decided to turn the shopping centre into an office building. However, he had sold shops in the mall to thousands of individual owners on a strata-title basis, and they came out in vehement protest against the plan.
It then turned out Huang didn’t have the cash to renovate the building and by early 2018, the development was largely abandoned.
Huang has since been embroiled in a number of legal disputes over unpaid debts. Zhongkun Plaza’s new owner will hope to have more luck with the problematic property.
But Bytedance isn’t the only internet firm adding real estate to its portfolio. A week ago, e-commerce giant JD.com also announced plans to purchase Jade Palace, an aging hotel in the same Zhongguancun area of Beijing as the mall, for Rmb2.7 billion. It says it has plans to convert the facility into business premises and a research and development unit.
The internet firms are developing their own properties instead of renting them because parts of Beijing have run short of office space. In the Zhongguancun area, where many of the tech firms congregate, grade A office vacancy levels were minimal in the later stages of last year, says property brokerage Savills. In fact, some of the internet giants are now major landowners. Part of the reason is a genuine search for space. Others are simply banking on property appreciation. “Some internet firms have found that their core business hasn’t been performing but their office buildings have increased in value. In some cases, the value of the property has exceeded the company’s market value,” says National Business Daily.
Take Sohu which spent $277 million back in 2006 to purchase land for its headquarters in Wudaokou, a neighbourhood in Haidian district. Today that property is valued at over $500 million. In 2010, the internet company bought another plot of land in Zhongguancun that is now worth Rmb2 billion.
“These buildings are probably the most valuable assets of Sohu. In fact, the total value of its property has already surpassed its market capitalisation at $830 million,” National Business Daily calculated.
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