Recently in Mainland China, the rental agency “Mo Fang Apartments” is suspected to have encountered financial difficulties, with reports of tenants in cities such as Shanghai, Hangzhou, Wuhan, Xi’an, and now also in various locations in Shenzhen being asked to vacate by January 15th due to landlords not receiving rent.
Following the New Year holiday season, tenants in areas like Longgang, Nanshan, and Baoan in Shenzhen have received notices to terminate their leases: some saw eviction notices posted on their doors, some were informed by landlords via phone to vacate within 3 to 7 days, and others who had just moved out from another Mo Fang apartment last month are now facing relocation once again.
According to a report from Shenzhen News Network, tenants at Gan Keng Po Yu and Mo Fang Apartments in Xinwei Zi Village, Longgang, were asked to move out by January 15th after the New Year.
Tenant Xiao Yu from Xinwei Zi Village stated that they received a notice to vacate because the management of Mo Fang Apartments owed rent to the landlords, requiring tenants to move out by January 15th.
The landlord of Xinwei Zi Village No.1 said on January 9th that they acknowledged the deposits and rent from the original Mo Fang tenants, offering to renew the lease with the same terms. The landlord confirmed that there were rent arrears by the management of Mo Fang Apartments, which were being resolved through legal means.
The customer service hotline at Po Yu mentioned that specific plans would be provided for tenants at the vacating stores.
In December last year, Mo Fang Apartments faced a crisis due to rent arrears, resulting in forced evictions of tenants in multiple locations including Shanghai, Guangzhou, Wuhan, and Xi’an. Some tenants reported power and water cuts by property management, severely impacting their daily lives. Despite pre-paying deposits and three months’ rent, Mo Fang Apartments only promised refunds within “15 to 30 working days” without offering any compensation plans. While some stores in Guangzhou have been taken over by a new operating party, tenants mentioned Mo Fang Apartments staff were absent during the transition, causing concerns even in stores operating normally.
According to notices posted by multiple store properties, Mo Fang Apartments owed tens of thousands to millions of yuan in rent, water, and electricity fees, including properties under Country Garden Group.
A deep investigation and reporting column “BUG” under Sina Technology previously reported that aside from individual properties, the property owners suffering from Mo Fang Apartments’ rent arrears also included those under Country Garden Group.
In August 2024, specific Mo Fang Apartments in Shenzhen faced water and power cuts due to rent arrears. Additionally, in 2017, a similar situation occurred with the Youth Apartment acquired by Mo Fang Apartments.
Mo Fang Apartments is one of the earliest operators in Mainland China’s centralized long-term apartment rental market. Their operating model follows a “lease-sublease” pattern, commonly known as the “sublandlord” model: Mo Fang Apartments lease entire buildings from property owners, conduct standardized renovations, and then subdivide and rent out individual units to tenants, earning the rental difference and management fees.
However, the long-term apartment rental industry generally faces challenges of long operating cycles, low rental returns, and high input costs. When market conditions decline or operational inefficiencies lead to decreased occupancy rates and lower rental income, while the fixed rental costs owed to landlords remain unchanged, operators are immediately burdened with significant cash flow pressure.
Mo Fang Apartments’ parent company is Mo Fang Life Services Group, established in 2009.
Mo Fang Life submitted IPO prospectuses to the Hong Kong Stock Exchange in September 2022 and April 2023, but both attempts ultimately failed.
Mo Fang Life’s debt continues to rise, with cash flow gradually tightening. By the end of 2022, Mo Fang Life had a debt-to-asset ratio as high as 85%, reaching a new peak.