Henry Keswick, chair of Jardine Matheson, was once asked what the secret of his family conglomerate’s success was. “We never sell,” he replied. Jardines was one of colonial Hong Kong’s most powerful commercial forces and still owns the most prime office and hotel properties in the business district. But cornering the rents in Central was not enough to prevent the rise of the four Chinese families that have come to dominate the city’s property market. The view from the Financial Times’ Hong Kong office captures the power dynamic. From the 59th floor of The centre at 99 Queen’s Road Central, developed by Li Ka-shing’s property group, you can look east towards his other flagship office tower, the Cheung Kong Centre. Together with the Cheng family’s Grand Hyatt hotel tower and 2 International Finance Centre, developed by the Kwok brothers and Lee Shau-kee, these developments surround – and tower over – Jardines’ properties in Central. But just as the Li, Cheng, Kwok and Lee families overshadow the Keswicks, there are signs that they could be eclipsed in their own backyard – this time by rivals from the mainland. Unlike Sir Henry, Li does sell, especially when he senses that prices in a sector are reaching their peak. Last week Hong Kong media reported that the tycoon might sell The centre for as much as HK$35bn ($4.5bn), with those interested including a subsidiary of state-owned Industrial and Commercial Bank of China, the mainland’s largest lender. If Li fetches such a sum for his tallest building in Hong Kong, it would be one of his biggest asset disposals since reaping $11bn from the sale of an Indian mobile phone group to Vodafone in 2007. Chinese companies have been snapping up Hong Kong office towers and European football clubs in part because of expectations that the renminbi will continue to weaken. The same logic underlies aggressive bidding by mainland property developers at Hong Kong land auctions. The territory has been governed as a Chinese “special administrative region” since British colonial rule ended in 1997 and maintains its own currency, which is pegged to the US dollar. It is likely to be some time before China Inc surpasses Hong Kong’s “big four” property families, just as they surpassed the old British colonial houses in the 1970s and 1980s, but the economic forces at work suggest this outcome is inevitable. In their most recent full-year results, the city’s four leading property developers reported total revenues of $26bn – compared with $111bn for the four largest real estate groups on the mainland. If the latter want to build up their land banks in Hong Kong, they have the financial firepower to overwhelm local rivals. It is similarly telling that the three richest men in Hong Kong are on average 89 years old with fortunes totalling $70bn – against an average 62 and $78bn for their three mainland peers. Politics is also likely to contribute to the two sets of property tycoons’ relative fortunes. In Hong Kong’s first decade under Chinese sovereignty, Beijing was hypersensitive to any perception that the “one country, two systems” formula was not being implemented to the letter. During that time investment bankers say the central government quietly intervened behind the scenes to prevent Chinese companies from making high-profile acquisitions in Hong Kong. Ten years on, Beijing is increasingly frustrated with the territory’s democratic aspirations. It welcomes a more overt role for mainland companies there as part and parcel of the Sinicisation it desires. The Li, Cheng, Kwok and Lee families are too entrenched – and far too rich – to fade away in Hong Kong. In their most recently reported financial year, they reaped a total of HK$20bn in tax-free dividends from their mainly monopoly businesses. But like the Keswicks, they represent the city’s past, not its future. http://www.ft.com/cms/s/0/41510bc4-6e56-11e6-9ac1-1055824ca907.html Category: Hong Kong
The local families of Li , Cheng , Kwok and dong dominate the Hong Kong property market . However , they could face rivalry from investors on the mainland . There were reports recently that Li Ka - shing might sell a flagship tower for as much as HK$35bn ( $ 4.5bn ) , with interested buyers including a subsidiary of state - owned Industrial and Commercial enterprises of China . Chinese firms have been buying Hong Kong office towers and European football pitches partly due to expectations that the renminbi will continue to weaken . It may be a while before Hong Kong 's " big four " property families are overtaken by mainland commercial interests , but it is only a matter of time .