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Hutchison Whampoa covered the floor and was supervised and named and punished for nearly seven years. Li Ka-shing cashed out more than HK $115 billion.
Sep 24,2020 08:09CST
translation
Source:Financial Union
The content below was translated by Tencent automatically for reference.

SMM: on September 23, a document issued by the Finance and Finance Bureau of Chengdu High-tech Zone was circulated in the industry. The document shows that Hutchison Whampoa Real Estate Chengdu Company has seriously affected the stable development of the regional real estate market because of its bad behaviors such as covering the ground and covering the market. Financial institutions in the High-tech Zone are prohibited from providing new financing and loans to Hutchison Whampoa Real Estate Chengdu Company and its projects. Financial institutions in the region are prohibited from providing assistance to Hutchison Whampoa in major asset restructuring.

In this regard, Chengdu Finance Bureau of the relevant people in the interview did not deny, only to the Financial Associated Press reporter that "do not know the document." The Finance and Finance Bureau of Chengdu High-tech Zone responded on the official website on the evening of the same day, "in order to implement the relevant requirements of higher-level departments on promoting the stable and healthy development of the real estate market, adhere to the positioning of 'housing without speculation' and resolutely crack down on the behavior of covering the market and cherishing sales. Recently, our bureau is working with relevant departments in the area to investigate and deal with a number of projects involving covering the market and sparing sale, including the Nancheng Duhui project."

"the government generally issues policies for the whole market, and it is rare to suddenly issue ban documents directly against specific enterprises, so this time it is relatively strict." An analyst from a well-known institution told reporters.

16 years of land hoarding angered Chengdu High-tech Zone?

In response to the issue that "Chengdu High-tech Zone forbids financing loans from Hutchison Whampoa Real Estate Chengdu Company", Cheung Kong Industrial Group responded to the media today that Hutchison Whampoa Real Estate (Chengdu) Co., Ltd. is not a subsidiary of Cheung Kong Industrial Group Co., Ltd. nor is it controlled by the group.

It is reported that Hutchison Whampoa Real Estate Chengdu Company is a project company of Nancheng Duhui. On July 23 this year, Changshi Group transferred part of its stake in the Chengdu Nancheng Duhui project to an enterprise named RZ3262019 Limited, which is 50 per cent owned by Yuzhou Group and Chengdu Ruizhuo Real Estate Co., Ltd.

"Yuzhou Group only took over the project this year, and the document circulated online is mainly aimed at the actions of Hutchison Whampoa, not Yuzhou." Said a person close to Yuzhou Real Estate.

Data show that Hutchison Whampoa Real Estate (Chengdu) Co., Ltd. was officially established in the first half of 2004. In 2004, Li Ka-shing bought the Nancheng Duhui project of Chengdu High-tech Zone at a low price of 2.135 billion yuan, with a total land area of 1036 mu. However, the project has been under development for 16 years and has not yet been completed.

In the transfer announcement, Changshi Group said it is expected to bring about 3.811 billion Hong Kong dollars (3.45 billion yuan) to the company through the sale of the Nancheng Duhui project. This has also led to an uproar of public opinion that Li Ka-shing is hoarding land and waiting for land prices to rise before reselling projects to make a profit.

"because this project has been hoarding land for too long and disrupted the land development plan and planning of Chengdu High-tech Zone, the Finance and Finance Bureau of Chengdu High-tech Zone has imposed relatively severe penalties on Hutchison Whampoa Real Estate Chengdu Co., Ltd." Bo Wenxi, vice chairman of the China Enterprise Capital Alliance, told reporters.

"even if Hutchison Whampoa sells this piece of land to Yuzhou Real Estate, what still continues is that the terms of the previous land transfer contract stipulate that Yuzhou Real Estate will still have to implement the original land transfer contract after taking over, and will not extend the development cycle because the land is sold by Hutchison Whampoa to Yuzhou Real Estate." Bo Wenxi added.

At present, the Nancheng Duhui project has been operated by Yuzhou Real Estate. With regard to the impact of the ban document of the Finance and Finance Bureau of Chengdu High-tech Zone, Yuzhou Real Estate told the Financial Associated Press, "the document issued by the High-tech Zone is mainly concerned about the project company." at present, there is no impact on project financing, the project has basically been completed, financing demand is small. "

"at present, 6 phases of the project have been handed over, and Phase 7 has been basically capped. Residential units can be put on the market after fine decoration and upgrading. It is expected that some of them can be pre-sold this year, and there will be confirmed income next year." Yuzhou real estate related people said.

Slow development and low turnover to gain excess returns

In fact, Changhe has continued to shrink the mainland property market since 2013.

In 2013, it sold Duhe Plaza in Guangzhou West City and Shanghai Oriental Huijin Center; in 2014, it transferred shares in Nanjing International Financial Center, Changyuan Group, Beijing Pacific Century Center, Chongqing Metropolis, and Shanghai Shengbang International Building; in 2016, it sold 50 per cent of Lujiazui Century Plaza; in October last year, Changshi Group transferred the Dalian Xigang project to Sunac, with a total transaction price of more than 4 billion yuan.

According to incomplete statistics by a reporter from the Financial Associated Press, the Li Ka-shing family has sold properties in the mainland and Hong Kong, China, several times in the past seven years, with a cash amount of more than HK $115 billion.

It is worth noting that the development time of Changhe projects is generally longer. Some media have done statistics before that 2005 was the year when Li Ka-shing's company took the most land, and 18 of its 29 real estate projects were uncompleted by 2013.

Lu Wenxi, senior research manager of Central Plains Real Estate, said in an interview with the Financial Associated Press that "some of the projects transferred by Changhe have been developed for a long time and have met their investment expectations."

Among them, the Shanghai Century Exchange project was transferred after a 12-year development cycle, with an unaudited profit of about HK $6.22 billion. Last year, Changshi sold the Dalian Xigangshan project to Fuchuang China, with a transaction price of more than 4 billion yuan and a land price of only 1.9 billion yuan in 2011.

"in the past, some Hong Kong-funded enterprises, relying on their strong capital strength, sat idle for a long time to wait for the land to appreciate, postpone the development of the land for many years, or changed hands, and the land price has risen sharply. In this way, the profit of a single project can be maximized." Bo Wenxi told reporters.

"this slow development and low turnover model is very different from the current high debt and high leverage-driven high turnover model in the mainland." The above-mentioned well-known institutional analysts said.

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