All-round tycoon gobbles 'hot potato' US property

Hang Lung Properties - headed by tycoon Ronnie Chan Chi-chung, who is known for his good connections to influential circles in both the mainland and America - won the bid for the American government's six-block residential property at Shouson Hill, which had been regarded as a "hot potato" over the past three months amid the Sino-US rift.

The developer secured the property for HK$2.56 billion - or HK$54,138 per buildable square foot - at the lower end of market expectations. Estimates put the value from HK$2.13 billion to HK$4.73 billion.

With a huge business interest in China, Chan has no position in the mainland's political advisory body or top legislature, unlike other SAR tycoons. Rather, he has deep connections in US business circles.

He is co-chair of Asia Society, a nonprofit organization founded by a third-generation member of the prominent Rockefeller family in New York.

Chan received his MBA from the University of Southern California. He was a director of US energy giant Enron, which filed for bankruptcy two decades ago as a result of fraud.

In September 2014, Chan's family, through its Morningside Foundation, donated US$350 million (HK$2.73 billion) to Harvard University.

Additionally, Hang Lung's chief executive Weber Lo Wai-Pak previously worked for American Citibank.

The property's selling price is close to the lower limit of valuations due to fluctuating market sentiment, bleak economy, and recent political issues, said Alvin Lam Tsz-pun, director at Midland Surveyors.

A price comparison shows that in July 2018 China Resources Land bought a 92,087-sq-ft site at 39 Shouson Hill Road for HK$5.9 billion - or about HK$85,847 per sq ft - from the family of Shouson Chow, one of Hong Kong's earliest tycoons.

Washington had put the six blocks occupying a 94,796-sq-ft spread at 37 Shouson Hill Road in Southern District up for sale amid escalating China-US tensions over Hong Kong. It had held the property since 1948.

The sale moved along against a background of strains in ties, including Washington stripping Hong Kong of its special trade privileges in reaction to the national security legislation.

In Hang Lung's interim report, Chan said the deterioration of Sino-US relations has greatly accelerated.

"The US is now thinking that this is its last chance before China becomes inordinately powerful," Chan said. "When two elephants fight, it is the grass that suffers. Hong Kong is but collateral damage. Since there is nothing that any of us can do to change the situation, we will just have to live with it."

The six blocks have a gross floor area of 47,382 sq ft. If demolished, experts say, a rebuilding program could produce close to 72,000 sq ft of gross floor area.

Hang Lung plans to spend about HK$4 billion redeveloping the property into luxurious detached houses, targeted for completion by 2024.

However, the sale raised eyebrows as residential property sales only account for a minor part of the shopping mall landlord's revenue.

In the first half, no property sale revenue was recorded, while the mainland's property leasing business contributed to over half of Hang Lung's revenue. It had nine malls in the mainland as of June 30.

In Hong Kong, Hang Lung's property sales business focuses on luxury residential projects. It has nine houses at the 23-39 Blue Pool Road project in Happy Valley. It is redeveloping Amoycan Industrial Centre in Ngau Tau Kok into residential units for sale. The project is slated for completion in 2023.

kevin.xu@singtaonewscorp.com