The Forbes Hong Kong Rich List was released, and the net worth of real estate tycoons shrank
Image source@Visual China
On February 22, Forbes released the 2024 Hong Kong Rich List, which saw the Hang Seng Index fall 29% in the past 12 months due to the downturn in real estate and trade, causing the total net worth of Hong Kong's 50 richest people to shrink sharply, from $324 billion last year to $296 billion. Overall, the wealth of 30 of the richest people on the list has shrunk. The Hong Kong government expects the economy to grow by 3.2% in 2023, buoyed by tourism and consumption growth. But with the property sector stagnant and sluggish exports, the post-pandemic recovery is still slower than expected. Hong Kong stocks performed poorly in the Year of the Rabbit, falling 6,319 points for the year, a decline of more than 28%.
Li Ka-shing is the richest man in Hong Kong for a second time, but he can't escape the shrinkage of his net worth
There is no change in the top five positions on the list. Li Ka-shing, the major shareholder of the Cheung Wo family, re-emerged as the richest man with a fortune of US$36.2 billion, but his net worth shrank by a third due to a one-third drop in the share price of its real estate flagship Cheung Kong, resulting in a decline from last year; the second on the list of the richest is the real estate tycoon Lee Shau-kee, whose companies Henderson Land and Sun Hung Kai Properties have been hit by the Hong Kong real estate market, and their wealth has decreased by US$3.3 billion year-on-year to US$27 billion; and the third is New World Development and Chow Tai Fook Chairman Cheng Kar-shun, whose wealth with his family has decreased by nearly US$7 billion to US$22.1 billion due to the slowdown in mainland demand, the largest decline in net value this year。
In addition to the top three, there are some noteworthy changes on the Hong Kong rich list. For example, Li Zekai, the son of Hong Kong's richest man, increased his fortune by $1 billion to $16.8 billion, rising two places to fourth. The wealth of Li Jiaxin, the daughter of Hong Kong's richest man, fell by $200 million to $10.8 billion, dropping one place to sixth.
In addition, there are some new faces on the Hong Kong rich list. For example, Lin Yuhui, founder and CEO of Excellence Amazon, Hong Kong's largest e-commerce platform, ranks 48th with a fortune of $1.4 billion. And Leung Kin Cheung, the founder and CEO of Ctrip, Hong Kong's largest online travel platform, has a fortune of $1.3 billion, ranking 49th.
Real estate tycoons account for 4 percent, and their net worth has shrunk
20 of the 50 richest people on the list are from the real estate sector, and more than half of the top 10 are related to investing in real estate. Even though the real estate industry has continued to run at a low level in recent years, the net worth of Hong Kong real estate tycoons cannot be compared with the peak, but it still accounts for 4% of the rich list, with a total net worth of 120.35 billion US dollars, a year-on-year decrease of 15.2 billion US dollars.
Affected by the cyclical nature of the real estate industry, their net worth has also changed to varying degrees, with 15 real estate tycoons having a significant net worth of 1%-25%, 2 real estate tycoons having the same net worth, and 3 real estate tycoons achieving a rise in net worth between 6% and 22%.
Even Hang Lung Properties, which has maintained a net debt ratio of less than 32% for many years, as a representative of a stable Hong Kong-funded real estate company, has also shrunk by 2% of its Chen family. According to the financial report, Hang Lung's revenue in 2023 will be HK$10.316 billion, and the net profit attributable to shareholders will be HK$3.97 billion, both of which will increase slightly year-on-year.
Data source: Forbes, Titanium Media APP mapping
In addition to the above 20 real estate tycoons, other wealthy people who diversify their operations have actually laid out a large number of real estate industries. Not long ago, the news that "Li Ka-shing sold a house in Hong Kong at a 7% discount" came out, and for a time "price reduction" became the key word for whether the property market could be saved. Due to the poor performance of Li Ka-shing's Cheung Kong Group in the first half of 2023, the property sales revenue was about HK $8.246 billion, down nearly 6% year-on-year. On the same day that the interim results were announced, the company announced the first price list of its "Qinhai Station II" project, which was priced at HK$15,000 per square foot, which is 3% cheaper than the surrounding second-hand houses, and equivalent to the property price seven years ago. The project eventually attracted 38,000 customers to snap up the purchase.
In addition, the Cheng Kar-Shun family's New World China has contracted sales of mainland properties of more than RMB13.4 billion in 2023 and will launch a number of landmark projects in first-tier cities in the mainland in 2024, with a sales target of RMB15 billion.
According to public data, in 2023, there will be a total of 58,035 property sale and purchase agreements in Hong Kong, down 2.7% from 2022 and 39.6% from 2021, and the total value of property sale and purchase agreements will be HK$477.9 billion, down 13.8% and 47.9% from 2022 and 2021 respectively. Hong Kong's economic recovery is not as fast as expected, coupled with the weak property market performance in the context of high interest rates, property prices have fallen by about 20% in the past two years. Since 2022, the real estate industry has continued to operate at a low level, and the decline in real estate asset prices has affected the shrinkage of household wealth.
In order to boost the property market, Hong Kong announced in October last year the introduction of three "spicy" measures for the property market, including shortening the applicable period of special stamp duty from three years to two years, halving the rates of buyer's stamp duty and stamp duty on new residential buildings to 7.5%, and even relaxing the threshold for mainland talents to enter Hong Kong, introducing a large number of mainland talents to become new Hong Kong residents, etc., but these policies have basically not played a role at present.
When it comes to the changes in Hong Kong's real estate market, we still need to admire Li Ka-shing's superhuman keen sense and forward-looking. Moreover, Hong Kong real estate developers generally have a strong ability to resist cyclicality and industry fluctuations. At the same time, financial control capabilities and development + operation capabilities have always been worth learning from mainland real estate developers. For example, Sun Hung Kai is to Vanke, and Hang Lung is to China Resources and Longfor. At the 2023 Yabuli Forum, Wang Shi also said that "Hong Kong's real estate developers have accumulated valuable experience after experiencing multiple high and low real estate cycles, and learning from Hong Kong is not outdated at all." For major real estate developers, only by choosing the good and following the good ones, learning to seek stability and slow growth in the cycle, and better understanding the operation rules and development trends of the real estate market, can they enhance their "confidence". (This article was first published on Titanium Media APP, author|Zhao Chenhan, editor|Liu Yangxue)