The property market in Hong Kong was highly concentrated, with a small number of developers dominating the market [Exhibits 7A, 7B]. Several of these developers had survived previous downturns and had been able to pick up assets from less fortunate competitors in the process. One company, Cheung Kong, and its associate, Hutchison Whampoa, had a market share of more than one-third. In the residential market, nine major developers supplied some 69 per cent of total new housing that hit the market in 1996.10 Although there was a good deal of competition at particular land auctions, in general the different major developers tended to focus on somewhat different market segments, thus avoiding direct competition with each other. No single developer dominated the supply to all housing or commercial classes.
Cheung Kong, founded in 1971 by Li Ka-shing, widely regarded as one of the richest men in the world, became a publicly listed company in 1972. In 1997, Li’s family still held a 33.4 per cent interest in the company and controlled its activities. Cheung Kong focused on property development, which involved the acquisition of land, planning, design, construction and finally the sale of completed units for a capital gain. The company had a land bank (yet to be developed property) of 23.0 million square feet in 1996 [Exhibit 8]. It engaged in development in all high-class and middle-class residential, industrial and commercial segments. From the 1980s to the 1990s, Cheung Kong focused its investment on large-scale residential projects such as Laguna City in Lam Tin, South Horizons in Ap Lei Chau, Whampoa Garden and Laguna Verde in Hung Hom, and Kingswood Villas in Tin Shui Wai.
Besides property development, Cheung Kong had a 49.5 per cent shareholding in another public listed company, Hutchison Whampoa, which also engaged in some property development and also operated port, retailing, manufacturing, telecommunications, infrastructure, energy, finance and investment businesses. Other subsidiary companies included Cheung Kong Infrastructure Holdings Limited, a company with substantial operations in Mainland China, and Hong Kong Electric, the monopoly supplier of electricity to Hong Kong Island. Cheung Kong Holdings and Li Ka-shing both had very good reputations in Hong Kong and thus the properties they developed were often sought after. Altogether, Cheung Kong’s business empire was valued at HK$468 billion (US$60 billion) in 1997.
Lee Shau-kee established the Henderson Land Development Company Limited in 1976. The company was listed on the Hong Kong Stock Exchange in 1981. The company was actively involved in property development, investment and management in Hong Kong as well as in property development in China. The total land bank of the company amounted to 24.2 million square feet in total gross floor area in 1996. Its land holdings were split between the New Territories (62 per cent), Kowloon (21 per cent) and Hong Kong Island (17 per cent). Henderson and associated companies held nearly 13.4 million square feet of agricultural land widely spread over various districts in the New Territories. Steps were being taken to lobby the Government to rezone these agricultural lands for development. In addition, the company was actively engaged in acquiring and amalgamating old building sites in urban areas from the private sector for redevelopment.
Henderson’s main focus was the development of small and medium-sized residential flats. Roughly 64 per cent of the land bank was earmarked for residential development, 22 per cent for commercial uses (of which 12 per cent for shops and 10 per cent for offices), eight per cent for industrial uses and 6 per cent for hotels and services. Besides property development, the company also had interests in three listed companies - Hong Kong and China Gas Company Limited, Hong Kong Ferry (Holdings) Company Limited, and Miramar Hotel and Investment Company Limited. |
