Hong Kong tycoon urges prudent approach to development amid global uncertainty

A Hong Kong property tycoon has called for a more prudent approach to the city’s development rather than accelerating projects amid global uncertainties, saying the industry’s willingness to invest in the Northern Metropolis hinges on the health of the market. Far East Consortium chairman David Chiu Tat-cheong also described the megaproject’s new land disposal approach – which requires winning bidders to handle multiple developments on a large plot – as good intentions with unintended negative consequences, as it could make it challenging for smaller developers to take part. In an interview with the South China Morning Post in Beijing on the sidelines of the annual “two sessions” political meetings in Beijing, Chiu pointed to global uncertainties arising from the United States’ military raid on Venezuela in January and the ongoing US-Israel attacks on Iran, which have disrupted global supply chains and driven up oil prices. Chiu, a standing committee member of the Chinese People’s Political Consultative Conference, the country’s top political advisory body, warned that surging fuel prices could prompt the US to slow the pace of interest rate cuts, affecting Hong Kong’s economy, even though Middle East investment in the city remained limited. “If you had asked whether [Hong Kong] should move faster six months ago, I might have said ‘maybe’,” Chiu said. “But today, I believe we should not rush. We should progress while ensuring stability, because the world is constantly changing and we cannot control it.” He added: “We as businesses and the Hong Kong government are very small players. We cannot control the overall situation. If we move too quickly in such a chaotic world, I am afraid we will stumble.” Beijing has tasked Hong Kong with adopting a reformist mindset and accelerating the development of the Northern Metropolis, a megaproject aimed at transforming 30,000 hectares (7,413.161 acres) of land near the border with mainland China into an economic powerhouse and housing hub. Chiu hailed the megaproject’s long-term economic potential, while praising the authorities for having gone all out in advancing its development. However, he said that developers’ appetite for investment depended largely on the state of the property market, with many currently focused on reducing their debt. “The speed of debt reduction depends on how fast we can sell properties,” Chiu said. “If sales are quick, we recover cash quickly and then have the funds to reinvest.” Chiu said his company owned a site in the Northern Metropolis that could provide nearly 1,000 flats and had entered the final stage of negotiations with the government. He remained upbeat about Hong Kong’s residential property market, estimating prices could rise by about 15 per cent over the next two to three years, supported by factors such as strong demand from mainland buyers amid low interest rates across the border. But Chiu declined to say whether he would participate in the coming “large-scale land disposal approach” pilot scheme, an initiative aimed at speeding up the megaproject by requiring the winning bidder to build private properties for various developments and public facilities on multiple land parcels totalling up to 20 hectares. He said that while it was understandable that the government aimed to advance residential and industrial development at the same time, the arrangement could pose challenges for smaller developers that lacked the capacity to develop multiple uses in tandem or secure suitable partners. “For example, I wanted to focus on phones, but [the partner] wanted to make iPads, and I have no interest in iPads,” Chiu said, adding that he had been seeking partners for the project. His comments came after Chinese Vice-Premier Ding Xuexiang encouraged Hong Kong’s entrepreneurs to take a more active role in the Northern Metropolis during a meeting with local delegates at the two sessions. The full version of the national 15th five-year plan submitted to the National People’s Congress, the country’s legislature during the meetings, also stipulated that the city should speed up the development of the megaproject alongside missions to better serve the country’s overall development. One of the focuses was helping mainland enterprises go global, with Chiu proposing to concentrate support for smaller businesses. “Companies like Huawei and BYD do not need David Chiu or any Hongkonger. They can go straight to meet [foreign] presidents and governments,” Chiu said. “Medium-sized enterprises wish to expand overseas but are squeezed by the US … their revenue can reach five billion dollars but when they go abroad they are running about like headless chickens.” Chiu also proposed attracting more real estate investment trusts to Hong Kong, which could draw immense capital from the mainland, and advocated more tax incentives to compete with Singapore. With Hong Kong set to devise its first five-year plan to align with the national blueprint, Chiu said the move would provide “big-picture guidance” rather than a planned economy, with the business sector still having ample room to navigate.