16 | FORBES ASIA APRIL 2018
comment further
on the transac-
tions.
Woo’s fortune is
estimated at $12.
billion. He was
the chairman of
Wheelock and its
main subsidiary,
Wharf Holdings,
until he stepped
down in mid-2015.
His son Douglas is
now at the helm.
he Kai Tak
parcel is the largest
available land fac-
ing Hong Kong’s
iconic harbor,
and the govern-
ment estimates it
will eventually be
home to 90,000 residents. It is targeting
investments in infrastructure that will
shorten the commuting time between
Kai Tak and the traditional Central dis-
trict to 15 minutes and is ofering in-
centives for the conversion of industrial
buildings in the adjacent areas to spur
its growth into a commercial hub.
Kai Tak closed as Hong Kong’s air-
port in 1998, but in the two decades
since, the seemingly choice develop-
ment site has sat largely vacant even as
much of the city has grown more dense
from population growth and housing
ever more dear. Soil contaminated with
leaked jet fuel and the government’s in-
eciency were blamed for the lag. Fi-
nally, the sales began in mid-201 3 , with
an aggressive HNA joining the fray with
bids that were more than double the
previous winning tenders. In all, HNA
scooped up nearly 50 acres in 2016–
2017 for $ 3 .5 billion.
Under pressure from regulators and
creditors, HNA has been selling down
assets to reduce its debt load. he Hain-
an-based company also has unloaded
properties in London and Sydney along
with global equity shares.
“HNA grew too fast. It’s grown fast-
er than their knowledge,” said Warut
Promboon, managing partner at
Bondcritic, an Asian credit research
FORBES ASIA
BILLIONAIRE BETS
firm in Hong Kong.
Mainland companies that had been
snapping up Hong Kong properties at
record prices were placed under new re-
strictions by Chinese authorities late
last year that are intended to put a stop
to “irrational” overseas investments.
(HNA hasn’t commented on its Kai Tak
disposal.)
By contrast, Lee’s returns over the
years had earned him nicknames like
“Hong Kong’s Bufett.” Lee’s fortune,
Hong Kong’s second biggest, soared last
year to reach $ 3 1 billion, and yet Hen-
derson Land, the property develop-
er that makes up the bulk of his for-
tune, still looks undervalued by some
measures.
Hong Kong’s major property play-
ers continue to trade at a discount of
around 40% to 50% to their net asset
values, and analysts say the trend is
likely to continue.
Feared unsustainability of high
housing prices, risk of government in-
tervention and low shareholder payouts
are the main factors behind the discon-
nect between Hong Kong’s residential
prices and property stocks, according
to Cusson Leung, JPMorgan’s head of
property research.
Hong Kong’s average home pric-
es jumped 14.8% last year, ensuring thatit would retain a
rank as the world’s
most unaford-
able housing mar-
ket for the eighth
consecutive year,
according to De-
mographia In-
ternational’s lat-
est survey. he
strength of the
city’s economy and
its low unemploy-
ment rate despite
immigration pres-
sures both con-
tribute to sustain
strong demand for
new housing. Also,
raw land is banked
by the authori-
ties—Kai Tak’s dis-
posal being a notable exception.
“Economics 101 tells us curtailing
supply in the face of decent demand
will produce rising prices,” says Peter
Churchouse, chairman at Portwood
Capital and a veteran analyst of Hong
Kong’s property sector. “The Hong
Kong’s government views land as a fis-
cal tool with a policy of drip-feed-
ing land onto the market at a rate that
guarantees prices will remain high.”
Although new-unit supply has
risen in recent years to about 15,
to 17,000 completions per year in the
private sector, that is still well short of
longer-term ranges of 24,000 to 29,
units a year. Private sector housing sup-
ply has not kept up with demographic
changes over the past two decades.
Churchouse also believes inter-
est rates are unlikely to present much
downside risk because they shouldn’t
rise to levels seen ahead of previous big
corrections. “he point is that there is
not a lot of domestically generated risk
in the housing market in Hong Kong,
risk that could generate a severe crash
of the likes we saw in the early 1980s
and following the 1997 Asian inancial
crisis,” he says.
So there ought to be enough lit for
a irst-class takeof—of lats, this time—
at Kai Tak. F SCMP / FELIX WONGOasis Kai Tak, a residential development by Wheelock Properties, is a taste of what’s to come.