Business | Property
Property market in China 'offers many opportunities'
Chinese Estates is one of the leading property companies in Hong Kong, special administrative region of China. Its core businesses comprise property investment for rental and development for sale.
- By Andrew Shouler, Deputy Managing Editor
- Published: 00:44 April 4, 2008
- Ming-Wai Lau says the key to a successful venture in China is to find a good and reliable partner.
- Image Credit: Supplied Picture
Dubai: Chinese Estates is one of the leading property companies in Hong Kong, special administrative region of China. Its core businesses comprise property investment for rental and development for sale.
Ming-Wai Lau joined the company in 2006 and has been an Executive Director since December 2006. He holds a Bachelor Degree of Laws from King's College London, Master Degree of Laws from London School of Economics, and a Doctoral Degree of Laws from King's College, University of London. He previously worked at Goldman Sachs Group, Inc. and Longview Partners LP in London. He is a registered attorney in the State of New York and a CFA (Chartered Financial Analyst) Charterholder.
Gulf News: You were part of a sizable delegation to the Gulf recently with the Chief Executive of Hong Kong. What were your targets from the visit, and your assessment of the outcome?
Ming-Wai Lau: The delegation to the Gulf sought to promote Hong Kong's financial and real estate and infrastructure capabilities. I was fortunate enough to meet numerous institutional investors and local real estate companies. During these meetings, I promoted not only the Hong Kong real estate sector's operational experience and expertise in Greater China, but also my company's existing projects and overall strategy going forward.
My trip to the Gulf was very useful, and I am glad to say that since returning to Hong Kong, I am in touch with some of the people I met, with a view to future co-investments.
What is your impression of the similarities and distinctions between Hong Kong, mainland China, the Gulf generally and Dubai in particular with respect to property development and opportunities?
This was my first proper visit to the Gulf, and I was delightfully surprised to find the many similarities between the two regions and between Hong Kong and Dubai.
Both regions are experiencing rapid economic growth and are led by governments that are keen on growth and welcoming of overseas investors. With Hong Kong and Dubai, both have world class infrastructure, a meaningful expatriate population, and are financial centres in their respective regions.
As to the distinctions, the legal systems and business culture are different and overseas investors ought to acclimatise locally.
With the property market in particular, all markets around the world are fundamentally different. This applies to Hong Kong and Dubai as well, as government policies and source of property demand vary.
Your company is substantially engaged in three areas of property business: investment, development and management. Can you describe the balance of those activities? Shopping malls, and especially their rejuvenation, appears to be a particular highlight. How has that strand evolved?
Property investment has always been the company's core business, and we have a portfolio of high-quality office and retail properties in Hong Kong.
In terms of revenue, our property development business varies from year to year, depending on a particular year's development pipeline. Currently, however, we are expanding into China with more and more property development projects.
We are known for our ability to rejuvenate shopping malls in Hong Kong. Historically, we would acquire properties in highly desirable locations. Such properties are acquired from distressed sellers or sellers who are seeking to dispose of their non-core assets.
We would then renovate or even demolish and redevelop the building, often changing its use as well. For example, some of our most successful malls were formerly offices and restaurants.
We are always on the lookout for such opportunistic acquisitions, but in a rising market like Hong Kong nowadays, it is not easy to acquire such properties at a reasonable price level.
Please outline your corporate strategy beyond Hong Kong, both into mainland China and overseas.
Currently, our strategy beyond Hong Kong focuses on Greater China. We have residential and commercial development projects scattered across China and Macau. China offers a lot of opportunities both in terms of geography and demographics. Given the common language and culture between Hong Kong and China, it is natural for us to focus on China.
Beyond China, we have from time to time considered other markets such as Vietnam and India.
For the time being, however, we have decided to focus on China; primarily because we do not yet have knowledge and contacts in these other markets.
The Gulf has also been mentioned from time to time, and it would be a great market to enter into, provided that we find the right business partners.
What pointers would you give to Gulf real estate investors and developers in examining the prospects for venturing into China generally? To what extent have non-Chinese companies been successful in establishing themselves? Are there areas of potential cooperation between domestic and foreign players?
Despite the recent macro-measures to cool the property market, China offers plenty of opportunities to overseas investors. Many Western institutional investors are successfully involved in property investment and development across China; from Beijing and Shanghai to Chengdu and Chongqing.
Residential development appears to be the most favoured sector, but for investors with the investment time horizon, developing offices and shopping malls will yield great returns in the long run.
The key to a successful venture in China is to find a good and reliable partner. There are plenty of real estate developers in China but, except for the biggest of developers, most of them are unknown entities to overseas investors.
Working with Hong Kong companies provides several advantages to overseas investors seeking to enter into China. First, Hong Kong companies have a Western business culture and are subject to the Hong Kong legal system; this should provide a high degree of confidence to any potential partner.
Second, working with a Hong Kong partner and basing the venture in Hong Kong would allow investors to benefit from Hong Kong's financial system and the free convertability of the Hong Kong dollar.
Third, many Hong Kong companies are already very experienced in China - our company, for example, has been developing residential and commercial real estate projects in Beijing for more than 15 years.
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