Developer reaping the fruits of closer mainland ties
Hang Lung Properties — one of Hong Kong’s oldest developers — boasts being one of the key beneficiaries of Hong Kong’s return 23 years ago, harvesting on the closer integration between Hong Kong and the Chinese mainland that has fueled the growth of the property sector.
“Following the reunification, Hong Kong and the mainland have forged key pacts that facilitate a heavier flow of people, goods and capital, and this bodes well for the property business,” said Hang Lung Properties Chairman Ronnie Chan Chi-chung.
The Pearl River Delta region, for instance, is one of the world’s largest global supply chain bases. The ceaseless flow of goods and services into the region will, in turn, attract professionals and capital, spurring demand for properties in Hong Kong.
“Looking ahead, the central government might come up with further measures to encourage more mainland enterprises to set up shop in Hong Kong and the city’s economy will benefit,” Chan noted.
The past 23 years have seen Hang Lung Group’s market capitalization surge from HK$19.1 billion ($2.44 billion) as of June 30, 1997 to HK$26.2 billion by Dec 31 last year — up 37 percent.
Besides dealing in residential, office and retail property in Hong Kong, Hung Lung Properties has been involved in the mainland’s property market since the 1990s, focusing on building high-end shopping malls in second-tier cities. The developer has cultivated its niche-market dominance in Shanghai, Kunming, Wuxi, Wuhan, Shenyang, Jinan, Tianjin and Dalian.
In addition to closer economic integration, the Hong Kong-listed company benefits from the mainland’s economic development that has spurred tremendous growth of the middle class.
“For nearly nine years, rental revenues from our mainland portfolios have exceeded Hong Kong’s,” Chan revealed.
As the economy falters due to weak export performance, the central government is poised to boost domestic consumption as a key economic growth driver. Expenditure on luxury homes and products on the mainland has seen a steep rebound in the past few months.
Looking ahead, Chan remains bullish about the mainland’s retail-property sector.
“Over the next three to five years, we see rapid growth for the mainland’s retail-property segment. Nowadays, mainland consumers as young as 30 years old can afford luxury items,” he noted.
Hang Lung Group’s property leasing revenue for the 2019 financial year stood at HK$9.139 billion, having soared 2.65 times since 1997. The developer’s total gross floor area of investment properties reached 60.9 million square feet — up 3.23 times, compared with 23 years ago.
During the financial year of 2019, the mainland accounted for 54 percent of the group’s property leasing revenue, whereas this market did not contribute any leasing revenue 23 years ago. The Hong Kong property leasing market accounted for the group’s entire leasing revenue in the 1996-97 financial year, but slipped to 46 percent last year.