Hongkong Land has recently announced a shift in its focus from the build-to-sell residential development business to fund management. The company, which is part of the Jardine Matheson conglomerate, plans to concentrate on ultra-premium integrated commercial properties in Asia’s gateway cities as part of its new business strategy. This change aims to strengthen its core capabilities, generate long-term recurring income, and provide superior returns to shareholders.
As part of this strategic shift, Hongkong Land intends to exit the build-to-sell residential development business and recycle up to US$10 billion in assets by 2035. The company also aims to increase its assets under management from US$40 billion to up to US$100 billion during this period. Additionally, it plans to double its profit before interest and tax and dividends per share by 2035.
In an interview with The Business Times, Mr Michael Smith, the chief executive of Hongkong Land, highlighted the company’s expertise in integrated complexes and its goal to become an investment property-oriented, high-quality income company. He emphasized the importance of third-party capital and expressed the company’s desire to become a fund manager.
The decision to shift focus comes after a comprehensive strategic review of its business. In the first half of 2024, Hongkong Land reported an underlying loss of US$7 million due to non-cash provisions related to its properties in China. The company’s portfolio includes prime commercial buildings in Hong Kong, the West Bund mixed-use project in Shanghai, and the Marina Bay Financial Centre and One Raffles Quay in Singapore.
While Hongkong Land’s development properties are primarily premium residential and mixed-use developments built to sell in various markets, the company recognizes the challenges associated with the development cash-flow business. This volatility has led the company to prioritize investment property business, which offers more stability and long-term growth potential.
Looking ahead, Hongkong Land plans to leverage strategic partnerships to expand its portfolio, enter new markets, and secure new projects. The company is exploring the possibility of establishing a real estate investment trust (Reit) and creating private funds to support its growth strategy. Additionally, Hongkong Land aims to collaborate with its sister company Mandarin Oriental to develop branded residences and attract third-party capital.
As part of its expansion plans, Hongkong Land will continue to invest in Hong Kong, Singapore, and Shanghai, while exploring opportunities in other major gateway cities in Asia. The company also considers developing luxury retail in Singapore and expanding its presence in key markets where high-net-worth individuals and luxury brands are prevalent.
Overall, Hongkong Land’s strategic shift towards fund management and investment properties reflects its commitment to long-term growth, stability, and providing value to its shareholders. The company’s willingness to adapt to changing market conditions and explore new opportunities positions it well for future success in the real estate industry.
