Li Ka shing Dumped China for Overseas Investment purchasing before China Escalating Land prices
Li Ka-shing,
Asia's richest man, said his companies have slowed land purchases in
Hong Kong and
China as prices have escalated to a high level.
"
Land prices in Hong Kong are high, and already showing signs of an unhealthy situation," Li said, according to a statement from
Cheung Kong Holdings Ltd., his flagship developer. "Land prices in China have surged, and we're unable to win auctions for land."
The comments by Li, who controls Hong Kong's biggest developer
Cheung Kong, underline concerns that governments in China and in the city are struggling to tame an asset bubble fueled by cheap credit. New home prices in October jumped in all but one of the 70
Chinese cities tracked, the
National Bureau of Statistics said Nov. 18. In Hong Kong, home prices remain more than twice as expensive as five years ago, even though they are little changed this year.
"In
China's first-and-second-tier cities, land prices are definitely too high," said Lee Wee
Liat, Hong Kong-based analyst at
BNP Paribas SA. "But there's no short-term solution as it'll take time for land supply to increase. Cheung Kong (1) is probably waiting for prices to come down before they'll buy again."
Cheung Kong's statement confirms comments Li made in an interview with
Southern Metropolis Weekly.
Prices in China have escalated to a level that people are struggling to cope with and developers need to be cautious, Li told the newspaper. Li said he's optimistic about the market and will continue investing if prices are reasonable.
Record Prices
Evergrande Real Estate Group Ltd. this month paid 5.14 billion yuan ($844 million) for a land site in
Beijing, a record for the
Chinese capital,
The Standard newspaper reported.
In September,
Sun Hung Kai Properties Ltd., Hong Kong's second-biggest builder, bought a site in
Shanghai for 21.8 billion yuan in an auction, a record for the city.
Property sales in Hong Kong by Li's companies, which include
Hutchison Whampoa Ltd., reached
HK$4 billion ($516 million) this year, the lowest in 13 years, because of a lack of government approval, the newspaper reported as Li saying.
Hong Kong's government has since
2010 introduced extra property taxes and tightened mortgage lending in its attempt to curb home prices that are now the highest among major global cities according to a Savills Plc report in March.
Li, 85, said any suggestion that his companies are withdrawing investments from Hong Kong is "a big joke" and that asset sales are driven by "business reasons," according to the Cheung Kong statement.
Victor's Kidnapping
In an interview with
Nanfang Daily newspaper published today, Li said his elder son Victor, who has worked with him for almost three decades, is ready to take over the running of his companies. Li said Victor is financially prudent and detail oriented, while younger son
Richard is smart and nimble.
Li also told the Southern Metropolis Weekly he paid HK$2 billion in ransom after Victor was kidnapped by Hong Kong gang boss
Cheung Tze-keung, nicknamed "
Big Spender," in
1996.
Li said he regretted not having enough security measures in place and that he told Cheung to take the money, flee Hong Kong and "be a decent man." He said Cheung called him again later and told him he's gambled all the money away.
Cheung was sentenced to death in
1998 after being tried by authorities in the southern
Chinese city of
Guangzhou for a series of crimes including the kidnapping of
Walter Kwok, then chairman of
Sun Hung Kai.
Li, with a fortune of $29 billion, according to the
Bloomberg Billionaires
Index, expanded his empire even as Hong Kong weathered crises ranging from rioting in the
1960s, a run on the currency in the
1980s, a property collapse in the late
1990s and the outbreak of the
SARS virus in
2003.
He stepped up investing in Hong Kong real estate in 1967, after rioting incited by the
Cultural Revolution depressed prices. He correctly forecast in
2007 that China's stock-market bubble would burst and in 2009 predicted the rally in Hong Kong home prices.
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