The Significance of Property Sales by Li Ka-shing in Hong Kong and Mainland China

tong jiang

Hatched by tong jiang

Jan 21, 2024

4 min read

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The Significance of Property Sales by Li Ka-shing in Hong Kong and Mainland China

In the real estate industry, there is a famous analysis framework that states, "Long-term view on population, mid-term view on land, short-term view on finance." For the past twenty years, the dominant factors driving the bull market in China's real estate have been the latter two factors. However, now the "long-term factor" of population is beginning to have an impact.

Italy, as an old developed country with a population of around 60 million and a per capita GDP of approximately $36,000, reached a 65% urbanization rate in 1970 and remained stagnant in the range of 65% to 70% for over half a century.

The collapse of housing prices in Japan is a well-known case. It took thirty years for Tokyo's housing prices to return to the levels of thirty years ago. Of course, many people believe that Japan's case is not representative and consider it an exception. They prefer to cite examples from Europe and the United States to argue for the "long-term rise" of housing prices.

There is a saying, "Do not make the first penny, as it is easy to become a martyr; nor make the last penny, as it is easy to become a ghost." Li Ka-shing's investment and business style, as seen from his past history, is a typical example of not making the first penny or the last penny. His sensitivity to and aversion towards risks are clearly higher than the average level of real estate developers.

Italy, as an old developed country with a population of around 60 million and a per capita GDP of approximately $36,000, reached a 65% urbanization rate in 1970 and remained stagnant in the range of 65% to 70% for over half a century.

In the early 1990s, Japan entered a period known as the "Lost Decade." It was during this "Lost Decade" that Japan's urbanization rate increased by 12 percentage points, reaching 91% from 2000 to 2010. This is what is known as "passive urbanization" because the aging population in rural areas declined in large numbers, resulting in a deep adjustment of the population distribution structure without significant active migration. Rural areas became depopulated, and small and medium-sized cities experienced urban decay.

After the reform and opening up, Li Ka-shing was in a semi-observant state for a long time. It was only after the policy certainty greatly increased in the 1990s that Li Ka-shing truly invested on a large scale in mainland China. And starting from ten years ago, when other Hong Kong businessmen were still deeply cultivating the mainland market, Li Ka-shing was one of the earliest to "escape." It even became a hot topic in public opinion to "not let Li Ka-shing leave."

In Kaohsiung, Taiwan, heavy thunderstorms caused flooding and road collapses in various areas. By around 10 am, the rain had gradually stopped, and the accumulated floodwaters began to recede. According to relevant departments, as of 9:55 am, there were a total of 43 reported cases of flooding, all of which had subsided.

These two seemingly unrelated events have underlying connections. The property sales by Li Ka-shing in Hong Kong and mainland China, as well as the heavy rain and flooding in Kaohsiung, highlight the importance of considering long-term factors, such as population, in the development and management of cities and regions.

Actionable Advice:

  • 1. Take a long-term perspective: When making investment decisions or urban planning, consider the long-term impact of factors such as population growth and urbanization rates.
  • 2. Diversify investment portfolios: Li Ka-shing's strategy of not making the first or last penny highlights the importance of diversification to mitigate risks in real estate investments.
  • 3. Improve urban infrastructure: The heavy rain and flooding in Kaohsiung serve as a reminder of the need to invest in resilient infrastructure to mitigate the impact of extreme weather events.

In conclusion, the property sales by Li Ka-shing in Hong Kong and mainland China, along with the heavy rain and flooding in Kaohsiung, demonstrate the significance of taking a long-term view and considering population dynamics in the development and management of cities. By incorporating actionable advice, such as a long-term perspective, diversification of investments, and improving urban infrastructure, stakeholders can better navigate the challenges and opportunities in the real estate industry and urban planning.

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