3rd June 2013
Tycoons Grasps Opportunities Ahead of Government Consultation This Year – Lee Sau-kee Speculates Yuen Long Land, 10 Times Profit in a Year
In the first phase of consultation for Yuen Long South Planning which the Hong Kong SAR government launched in April 2013, Tong Yan San Tsuen and a total of 200 hectares of warehouse areas in Kung Um Road are marked as “land with development potential”. The consultation focuses on the possibilities of building residential units in the said plots of land and it could be developed by a joint-venture between private developers and the government. Lee Shau-kee, Chairman of Henderson Land, who announced his plan for “land donation” grasped the golden opportunities ahead of time. In recent years, a company on whose board Kwan Nai-hung (transliteration), a brother-in-law of Lee, sits have acquired – with other relevant intermediaries – 600,000 sq. ft. of land near the areas at an average price of less than HK$100 per square foot. Since the government announced the South Yuen Long plan, the land price in that area went up to above HK$1,000 per sq. ft. The valuation of the land Lee owns in those areas has gone up 10 fold.
At least 60 plots of lands near Kung Um Road are owned by consortiums related to Henderson Land. Three quarters of these plots of land are owned by Kai Man International and Long Bond Investment, and were mostly purchased in 2008. The latest transaction – in which HK$4.7 million was spent to acquire a 35,000 square feet of warehouse land at an average of HK135 per square foot – was completed in March 2012. Kwan Nai-hung and Fung Kit-yi are the directors of both companies, and Kwan is Lee Shau-kee’s brother-in-law.
The remaining 25% of the 60-plus plots of land are owned by two intermediary companies that are closely related to Henderson Land. Ming Wai Properties has been managing warehouses in the Kung Um Road area for over a decade. People familiar with the area said that Ming Wai has been actively approaching warehouse owners to acquire their land, but most of the land Ming Wai showed interest in was eventually acquired by Kwan Nai-wai. Ming Wai Estate owns at least six plots of land in the area via a holding company: Welsin Holdings.
Another intermediary closely linked to Henderson Land is Lap Shing Enterprises (立誠企業 – editor cannot verify the English name of the company hence a transliteration is used). Huen Po-wah and Lo Tai-on are the directors of the company, which participated in the purchase of Tong Lau (low rise old buildings) on Victory Avenue in Ho Man Tin and Tai Kok Tsui. Lap Shing Enterprises owns at least five plots of land in the Kung Um Road area.
People familiar with the area said that the intermediaries would not transfer the land to the developers immediately after they acquire the land, to keep the information private in order to control the acquisition price. They would also manage the land for developers and use them for temporary car parks or warehouses to gain rental income. Ming Wai, for example, operates a construction materials supply shop, which is located on land belonging to Henderson Land.
Chui Wai-kin, a warehouse owner who owns 160,000 square feet of land, said that the land price in Kung Um Road warehouse area went up from around HK$100-150 per square foot in 2008, to the over HK$1,000 this year, representing a 10 times increase.
Wong Hon-wing, an agent from Wing Hing Property in Yuen Long and a land resources development consultant, said that Hong Kong SAR government’s plan to develop Yuen Long South for residential use helps the developers that have been accumulating land in the area as they will not have to pay any land premium should they decide to build residential units after the plan is confirmed. La Grove, for example, is a new development in Yuen Long. Sun Hung Kai Properties had to pay HK$2,000 per square foot in land premium. “The government is basically giving the green light to developers by converting warehouse land in Yuen Long South into residential use. The developers will able to build residential units without applying (to the Town Planning Board) for change of land use. The earlier the property developers purchased those lands, the higher the margin they could get.”