Hong Kong Billionaire’s K. Wah Wins Shanghai Real Estate Bid, Sees “Excellent” Opportunity

Hong Kong billionaire Lui Che-woo has successfully invested in real estate in Shanghai since the 1980s. Take the K. Wah Center on the city’s swanky Huai Hai Road. A new project emerging amid the country’s economically painful zero-Covid policy took a big step forward on Friday when its flagship company K. Wah International Holdings announced it had launched a joint tender for HK$4.18 billion or $532 million for land development on the west side of the city.

K. Wah, although a subsidiary, will hold 60% of a joint venture in partnership with two state-owned companies to develop residential and commercial real estate in an area planned for artificial intelligence and healthcare companies, the announcement said.

K. Wah said the project “represents an excellent investment opportunity for the group to engage in transit-focused development to expand its presence in the Shanghai real estate market, replenish the group’s land bank and is consistent with the Group business development strategy planning.”

The announcement comes after China’s overall GDP growth fell to 0.4% year on year in the second quarter. In Shanghai, where millions experienced lockdowns of varying durations from April to June, GDP contracted by 5.7%. China’s ties with the United States and Europe have been strained by Beijing’s close ties with Russia and recent military exercises near Taiwan.

Mainland-born Lui, who is now worth $12.1 billion on the Forbes Real-Time Billionaires list, moved to Hong Kong at the age of four. Having only a primary school education, he helped his grandmother run a retail business selling basic necessities in Hong Kong as a teenager. In the late 1940s he re-exported army surpluses and in 1950 bought construction equipment from Japan and sold it to Southeast Asia. In 1964, thanks to a record bid, he became the first private company to receive mining rights in Hong Kong.

After that, Lui started building simple houses there. Lui was also an early investor in China, buying into a quarry in Shenzhen in 1980 and later acquiring a land bank in Guangzhou. The K. Wah Center opened in Shanghai in April 2005; Aside from real estate, part of his wealth also comes from Macau-based casino operator Galaxy Entertainment Group.

Shui On Land, another long-term Hong Kong success story in Shanghai real estate development, led by billionaire Vincent Lo, noted in a filing last month that China’s near-term business prospects face uncertainty. “The Chinese economy faces significant headwinds amid a highly uncertain geopolitical environment, strained US-China relations and tightening monetary policies in advanced economies,” it said. “The debt problem in the real estate sector will take time to resolve. Nonetheless, the government has the political tools and experience to manage the developer debt restructuring process and address the issue of the suspended project.”

Yet Shui On, whose Shanghai projects include the famous Xintiandi nightlife and shopping district, was nonetheless optimistic about longer-term investment prospects there. “While the immediate outlook is far from favorable, the upcoming market correction should allow us to acquire assets in prime locations at attractive prices in what may be a golden era for new investments,” it said.

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