Property downturn takes toll on wealthiest families in Hong Kong

In the last four years, the market capitalization of Hong Kong’s four largest family-owned developers have lost about $50 billion as a result of Covid-19 limitations and interest rate increases, which has hurt the entire real estate market. Shares of these developers have fallen by more than a third.

The Lis of CK Asset, the Kwoks of Sun Hung Kai Properties, the Lees of Henderson Land, and the Chengs of New World Development control the majority of the real estate market in Hong Kong.

Since April 2019, the share prices of their Hong Kong-listed companies have decreased by an average of around 35%, and by the end of March, their total market value had decreased from about $132 billion to $86 billion. The largest decreases were seen at New World and Henderson, at 62% and 40%, respectively.

“It is definitely a tougher time than it has been in the past,” said John Burns, an honorary professor of politics and public administration at the University of Hong Kong. On top of the property slide and the 2019 protests that hit the economy, Beijing “has been marginalising tycoons”.

Only a small number of wealthy families are permitted to place bids at government auctions for land parcels under a law put in place under British colonial control. The growth of these families into retail, infrastructure, and telecommunications has been fueled by the increase in real estate prices over the previous several decades.

However, underlying profits at Sun Hung Kai, the city’s largest developer by market value, and New World Development fell 36% and 14%, respectively, for the six months ended December 2022, while underlying profit at Henderson Land fell 29% for the entire previous year. This was due to a 40% decline in home sales and a 15% decline in residential property prices.

Despite a 30% decline in revenue from real estate sales in Hong Kong and mainland China, CK Asset, founded by Hong Kong’s richest man Li Ka-shing, reported a 2% increase in profit last year. Asset sales and the return to profitability of its UK pub business Greene King helped boost overall returns.

In mainland China, where their combined income last year was $4.8 billion, down 40% from the year before and the lowest since 2019, developers were also harmed by strict lockdowns.

- Published By Team Hongkong Journalist

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