Swire Properties said it will sell certain non-core assets and the proceeds will be reinvested in new opportunities, part of the new strategy, focusing on the mainland market.

It is worth mentioning that the industry story of Li Ka-shing leading Chinese capital to acquire British capital also emerged during this period. In 1977, Li Ka-shing acquired 20 million Water shares, accounting for more than 20%, once surpassing Jinghe Group, the major shareholder of Hutchison Whampoa. The following year, Li Ka-shing took action again. With the help of the world's ship king Bao Yugang , he staged a "snake swallowing elephant" to acquire the British-owned foreign company Hutchison Whampoa. Later, Li Ka-shing joined forces with other members of the "Four Major Families" to form a Chinese-funded group to fight against British capital forces, and gradually divided the market share of the British capital consortium in China.

Thanks to the rapid development in the late 1970s and the favorable policies such as reform and opening up , the Hong Kong real estate market rose sharply and reached its peak in 1981, with land prices, property prices and rents set historical records one after another. However, it also brought about the prevalence of speculation. In addition, the oil crisis in 1980 greatly affected the confidence of the Hong Kong real estate market. In 1983, the Hong Kong real estate bubble burst and the real estate market collapsed in an all-round way.

1984, after two years of 22 rounds of government negotiations, the Chinese and British " Joint Statement " was officially signed, and the issue of Hong Kong's return to was implemented. While the economy ushered in a great prosperity, the real estate market also launched a big rise and started a 13-year bull market. According to statistics, increased by more than 20% in 7 years from 1984 to 1997, and 3 years increased by more than 36%. The housing prices per square meter in central areas such as Central Ring Road and Tsim Sha Tsui are as high as HK$100,000, and office buildings in prime locations have sky-high prices of HK$200,000 per square meter. When the real estate wave was surging, with the sharp rise in land prices and property prices, developers of small and medium-sized real estate companies gradually became weak, either being eliminated or merged and acquired. During this period, the oligopoly of Hong Kong's real estate industry became more obvious, and the four major families have occupied half of the Hong Kong real estate market. The internationalization of the real estate market was also an important feature of this period. At that time, Japanese, Taiwanese and Southeast Asian capital poured into the Hong Kong real estate market. Data shows that in the three years from 1986 to 1989, Japanese investment in Hong Kong real estate investment reached 20 billion yuan, while Taiwanese investment took over Japan in the late 1980s and continued to increase investment in the Hong Kong real estate market.

The prosperity of the Hong Kong real estate market continued until the late 1990s, and 1998-2003 was a period of adjustment of the Hong Kong real estate market. In 1997, Chief Executive Tung Chee-hwa launched the "85,000" plan, announcing the construction of 85,000 residential units (including public housing and private housing) every year, and regulated the rapidly rising housing prices by significantly increasing the supply of real estate. Subsequently, the Asian financial crisis also swept, eventually causing Hong Kong's real estate to take a sharp turn, and the real estate market price plummeted and plummeted. According to statistics, from the peak in 1997 to mid-2003, Hong Kong housing prices fell by more than 65% on average, and a large number of "rich people" became "negatives". During this period, the government has also introduced relevant policies to stabilize housing prices many times, such as abolishing measures to restrict property speculation, increasing the amount and quota of "first-time property loans", and regulating land supply, but it still has little effect on reversing the decline in the property market.

Until June 2003, Hong Kong and the Mainland officially signed CEPA, namely the "Arrangement between the Mainland and Hong Kong on Establishing Closer Economic and Trade Relations". The core of this agreement is mainly that the Mainland implements zero tariffs on Hong Kong goods and allows individuals to travel to Hong Kong. After the signing of CEPA, Hong Kong hotel , retail, catering and transportation and other related industries gradually recovered, Hong Kong's economy gradually stabilized, and the real estate market gradually improved.

From the return of Hong Kong to the early 21st century, Hong Kong-funded real estate companies also seized the opportunity to expand their business layout to the mainland. In the 1990s, Hong Kong-funded real estate giants Hutchison Whampoa, Hengke Real Estate , Sun Hung Kai, and Hang Lung Group spent 10 billion yuan in first- and second-tier cities in mainland China. 2000, Hutchison Whampoa frequently invested in commercial real estate and tourism real estate in the mainland, including Hainan Haitang Bay, Chongqing Nanbin Metropolis, Ningbo World Village and Guangzhou Xicheng Duhui projects.

The return of Hong Kong and the signing of CEPA not only bring opportunities for Hong Kong-funded real estate companies to make gold in the mainland, but also brings the Hong Kong real estate market back to life. 2003 also became the beginning of a new round of rising real estate in Hong Kong, and then began a 15-year boom. Hong Kong housing prices have risen for 15 consecutive years. The Hong Kong private residence price index has risen 5.7 times from July 2003 to July 2018. Among them, Class A private residences in Hong Kong Island, Kowloon , and New Territories increased by 7.1 times, 6.9 times and 6.2 times respectively, with an average annual increase of more than 10%. During this period, although there were emergencies such as the 911 incident in the United States, the 2008 financial crisis and the European debt crisis, Hong Kong real estate still maintained an upward momentum in the turmoil under the support of strong economic development. During the period from 2009 to 2018, in order to curb the barbaric growth of Hong Kong's real estate market, the government has repeatedly curbed the rise in housing prices by increasing the down payment ratio, imposing and increasing buyer stamp duty, increasing land supply and new residential buildings, but it has never truly shaken the rising trend of housing prices.

In addition, during this period, Hong Kong real estate also experienced local capital outflows, and mainland capital entered the Hong Kong real estate market crazily. In October 2012, Hong Kong set buyer stamp duty for non-local permanent residents, with the tax rate being 15% of the house price. In November 2016, the government issued another "spicy trick" to increase the stamp duty for all residential properties to 15%. Only local permanent residents in Hong Kong who purchased the first house can be exempted. However, this "combination punch" also hit Hong Kong's local capital and buyers, causing local buyers to flee Hong Kong and buy properties overseas. However, Hong Kong's real estate market did not become cold. In 2012, Agricultural Bank of China spent nearly 5 billion yuan to acquire an asset in Central as its headquarters in Hong Kong. In 2015, Evergrande Real Estate purchased the Wantong Building in the United States for HK$12.5 billion. China Life and Everbright Holdings also spent a lot of money to buy a property in Hong Kong. In addition, many mainland real estate companies have intervened in Hong Kong's real estate development and acquired land in Hong Kong, including many Chinese real estate companies such as HNA Group , Vanke , Longfor Real Estate and China Overseas Development .

In addition to property and land, Hong Kong luxury homes were snatched by mainland wealthy business buyers during this period. From 2007 to 2016, many commercial giants, including Alibaba Jack Ma, Evergrande Xu Jiayin, SF Wang Wei, Zhongyu Real Estate Zhang Songqiao, etc., spent hundreds of millions to tens of billions or even billions of Hong Kong dollars to buy luxury homes on the top of the mountain. According to statistics, in the 2017 fiscal year, the Hong Kong government's auction revenue exceeded HK$89.1 billion, of which approximately HK$48 billion came from Chinese consortiums, accounting for more than half.

The "epidemic" Hong Kong real estate market (2019-to-present)

The 15-year-old bull market in Hong Kong showed a turning point in the second half of 2018. In June 2018, the Hong Kong Special Administrative Region Government implemented the " vacant tax " to vacant first-hand private residences, severely cracking down on the "hoarding behavior" of real estate developers. In terms of the external environment, the turbulent international economic situation led to a downward trend in the global economy, and the Hong Kong real estate market began to cool down and entered a pullback period. Data shows that the Hong Kong property market has fallen for five consecutive months since July 2018, with a cumulative decline of 9%.

However, in the early 2019, the Hong Kong property market showed signs of stabilization. In the first quarter, Hong Kong's first-hand and second-hand properties sold relatively active, and in March, multiple property price indexes increased, and the second-hand housing market also showed signs of rebound. Industry analysts pointed out that after experiencing a brief pullback in the second half of 2018, the fundamental reason for this is still the fundamental reason for Hong Kong's real estate, which has a large population and a small land area, and the market is in short supply.For a long time, in addition to economic development, Hong Kong's tight land supply and insufficient supply have also been essential factors that have led to "every inch of land" and high housing prices in Hong Kong.

In the second half of 2019, affected by the social security issues in Hong Kong, the real estate market fell again, and even experienced a continuous decline of 5 months. It was not until November of that year that it was slightly rising. According to data displayed by the Hong Kong Land Registration Office, the number of sales contracts for all buildings in Hong Kong (including residential buildings and non-residential buildings) reached 6,701 in November 2019, an increase of 24% month-on-month. Judging from the number of building sales and the total value of the transaction contracts throughout the year, the number of building sales contracts in Hong Kong in 2018 was 79,193, and the number of selling contracts in 2019 was 74,804, a year-on-year decrease of only 6%. Judging from the total value of building sales contracts, the total value of buying and selling in 2019 was only 7%. In addition, according to data released by the Hong Kong Rating and Valuation Department (the government department that valuates and collects rates and rents from Hong Kong real estate properties), the Hong Kong property price index rose by 5.31% in 2019, the increase for 11 consecutive years since 2009. Overall, in 2019, the Hong Kong property market showed a rise first and then a decline, but by the end of the year, it was a flat trend.

Since the outbreak of the new crown epidemic in 2020, all walks of life have suffered heavy losses, but the development of Hong Kong's real estate market has stabilized. After several rounds of impact on the epidemic, the real estate market remains firm and the overall "epidemic" state is exempted.

In 2020, the Hong Kong real estate market fluctuated repeatedly with the epidemic, and its annual performance was completely opposite to 2019. It was a bear market in the first half of the year and turned into a bull market in the second half of the year. In early 2020, due to the sudden outbreak of the epidemic, the SAR government adopted a strengthening entry and exit restrictions, and Hong Kong's economy was also deeply affected. Data shows that in the first quarter of 2020, Hong Kong's economy GDP fell by 9%, once surpassing the decline of the 2008 financial crisis. The economic downturn caused the number of unemployment to hit a new high, and the real estate market also declined. In the first five months of the Hong Kong property market in the first half of 2020, the number of sales contracts for all buildings (including residential buildings and non-residential buildings) decreased by more than 50%, while the amount of sales contracts for all buildings fell by more than 70%.

However, with the implementation of the National Security Law in the second half of 2020, demand for home purchases has increased, and the Hong Kong property market has also ushered in a major reversal. Especially after July, the number of building sales contracts in Hong Kong and the total value of building sales contracts achieved double growth compared with 2019, and the annual decline in housing prices in Hong Kong was only about 1%. Analysts believe that despite the multiple rounds of epidemics in Hong Kong's real estate industry in 2020, Hong Kong's housing prices are still "still unstoppable". The fundamental reason is that Hong Kong's real estate industry has a large population and a small land area, large demand and low interest rates, the performance of Hong Kong's real estate market is so strong. In addition, mainland real estate developers and home buyers are also the backbone of supporting the Hong Kong real estate market in 2020. According to media reports, of the 11 plots sold in Hong Kong in 2020, 5 pieces of land were entered by domestic real estate developers, including well-known real estate developers such as Vanke, Country Garden, and Kaisa. The investment amount of mainland real estate developers exceeded HK$17 billion, accounting for nearly half of the total transaction volume. In addition, mainland wealthy people are still enthusiastic about investing in the Hong Kong property market. In the first eight months of 2020, the Hong Kong property investment market generated a total of 32 large-scale transactions of more than HK$100 million, and half of the buyers were mainland wealthy people.

is different from the steady real estate market in 2019 and 2020, and the Hong Kong real estate market in 2021 shows a "sky-sky" trend. post-epidemic era, with the gradual recovery of Hong Kong's economy, Hong Kong's property market has seen "both volume and price increase", and multiple data set new highs. In terms of transaction volume, the total transaction volume of Hong Kong's residential market in 2021 hit a nine-year high. According to data from the Land Registration Office of the Special Administrative Region, since February 2021, Hong Kong's residential transactions have recorded more than 6,000 transactions for six consecutive months, with 74,297 residential transactions throughout the year, setting a new high after 81,333 in 2012. In addition, the total value of residential sales contracts in Hong Kong in 2021 was HK$733.9 billion, and increased by more than 30% year-on-year, setting a new record for the previous historical high of HK$690.34 billion in 1997.

transaction volume while the performance of the outstanding performance, Hong Kong housing prices soared simultaneously. Milian floor price index continued to rise from the low of the year at the end of January 2021 to the historical high in August, up nearly 6% this year. According to data from JLL , the prices of small and medium-sized residential buildings in Hong Kong rose by 4.4% in 2021, and the prices of luxury houses rose by 7.2%.

Hong Kong real estate market has basically recovered in 2021, but from the fourth quarter to the beginning of this year, has once again suffered a "freezing" due to the dual impact of the fifth round of epidemic attacks and the continued hike of interest rates in the United States. According to data from the Hong Kong Office of Centaline Property, the overall private residential transaction volume in Hong Kong in the first half of 2022 was 23,250, with a transaction amount of 234 billion yuan, a decrease of 26% and 28% from the second half of 2021. In addition, the number of first-hand residential registrations in the first half of the year also hit a nine-year low in the first half of 2013, while the number of second-hand transactions hit a new low since the second half of 2019. In terms of floor price of

, according to data from the Rating and Valuation Department on September 28, the Hong Kong private residential price index in August was 368.2 points, a three-and-a-half low since March 2019. The Hong Kong housing price index in the first eight months of this year has fallen by 6.52%, compared with the historical high of 398.1 points in September last year, with a cumulative decline of 7.51%. Another second-hand property price indicator has also "fallen". The Central Plains City Leading Index (CCL), which reflects the trend of second-hand property prices in Hong Kong, has fallen for 10 consecutive weeks, with the latest 169.93 points, a sharp drop of 11.2% from last year's peak, and also hit a new low of four and a half years since February 2018.

The dismal Hong Kong property market this year is not only reflected in the transaction volume and property price index, but also in the news, Recently, Cheung Kong Group, a subsidiary of Li Ka-shing family , announced that it would sell its top luxury property project in Hong Kong for HK$20.77 billion, and the company is expected to obtain HK$6.3 billion from the sale. In response to this, IPG China chief economist Bai Wenxi said that Li Ka-shing's sale of Hong Kong assets at this time should be related to the decline in the Hong Kong property market. In addition, he further pointed out that the luxury housing projects located in Hong Kong's mid-mountain were originally high-quality assets to resist inflation and economic fluctuations, but the current demand in the Hong Kong market is insufficient, and the sharp interest rate hikes have brought economic growth pressure, etc., the Hong Kong property market has shown an overall downward trend. In addition to Li Ka-shing's bid for luxury houses in Hong Kong, there have been news that other wealthy businessmen have sold their properties. It was reported in September that Huazhi CEO Chen Kaiyun had sold the GOUGH HILL RESIDENCES bungalow on the top of the mountain in the form of a company's equity transfer, at a price of about HK$500 million, and the sale earned HK$320 million.

Buy the bottom of the mainland again. Why can Hong Kong-funded real estate companies achieve counter-cyclical operations

While mainland wealthy people are constantly flocking to the Hong Kong real estate market to "buy, buy, buy" the Hong Kong real estate companies have also begun to return to the mainland real estate market and conduct reverse land acquisition. Recently, Hong Kong New World Group CEO Zheng Zhigang shouted that New World Group plans to invest 10 billion yuan in cities such as Shanghai, Guangzhou, Hangzhou, and Shenzhen within 12 months, equivalent to one-sixth of the annual revenue of the entire New World Group. Swire Group also stated that it is expected to invest 50 billion yuan in the mainland in the next ten years. In addition, many Hong Kong real estate developers, including Hang Lung Group, Hong Kong Land , Ruian Real Estate, Kerry Construction, Henderson Land, Hong Kong Yuhua, Renheng Land, etc., have also continuously acquired land in first- and second-tier cities such as Shanghai, Guangzhou, Shenzhen, Wuhan, Suzhou , Chongqing, and Chengdu in the past two years. Even Li Ka-shing's Hutchison Whampoa once again participated in the first round of centralized land supply auction in Guangzhou 10 years later.

In the early days of reform and opening up, most mainland real estate companies learned from the Hong Kong real estate business model. Systems such as "layered sales" and " selling houses " were also transmitted from Hong Kong to the mainland. However, due to differences in land endowment, economic development speed, and pace of urbanization construction, mainland real estate companies and Hong Kong real estate companies embarked on two completely different paths. Similarly, as the mainland real estate market bid farewell to the barbaric growth and enters the era of intensive cultivation, it sells assets to alleviate liquidity pressure and embarks on the road of light asset operation. On the other hand, Hong Kong real estate companies are crazily buying at the bottom in the mainland. Compared with the two, there are different situations.

So, how did Hong Kong real estate companies, which have always been restricted by the restrictions of "many people and few land", achieve cross-cycle development and return against the trend, and what reference can be used for the long-term development of mainland real estate companies? Through the previous review of the century-old history of Hong Kong's real estate development, we have summarized the following points:

first, compared with mainland real estate companies, Hong Kong real estate companies have a low debt- ratio, so liquidity risk has a smaller exposure and a strong anti-cyclical fluctuation ability.Statistics show that at the end of 2021, the net debt ratios of Hong Kong real estate companies such as Henderson Land, Sun Hung Kai Properties, and Kerry Construction were all around 20%, while the net debt ratios of Cheung Kong Group and Swire Real Estate were even only 7.9% and 3.32% in single digits. Correspondingly, most mainland real estate companies are struggling on the edge of three red lines. The three red lines of real estate require that the debt-to-asset ratio of real estate companies excluding prepayments shall not be greater than 70%, the net debt ratio shall not be greater than 100%, and the cash-to-short-term debt ratio shall not be less than 1 times. Compared with Hong Kong real estate companies, the debt pressure of mainland real estate companies can be seen.

Second, Hong Kong real estate companies started to do existing business very early due to the limitation of the land area that can be developed, focusing on existing operations. Especially property management, second-hand housing operation and renovation, shopping mall operation, etc. In this process, enterprises can achieve positive operation of cash flow to avoid liquidity crises.

Third, Many Hong Kong real estate companies' layout in the mainland are mainly concentrated in first- and second-tier cities. In the stage of real estate bid farewell to the rapid growth of real estate, the real estate business in the core urban circle still has growth potential and has stronger risk resistance.

fourth, Many Hong Kong real estate companies are family-run, pursuing the preservation and appreciation of assets, while mainland real estate companies are mostly professional managers model, pursuing more scale and rapid growth, which also means higher risks for the real estate industry. Therefore, the company's modern management system needs to be optimized, and the reward and punishment system for professional managers also needs to be formulated with multi-dimensional indicators of comprehensive income risks.

and other reasons have formed the "restraint gene" of Hong Kong real estate companies, restrains blind expansion, and pays more attention to the ability to achieve their own operating cash flow through the operation of stock assets , so that countercyclical land acquisition operations can be achieved during economic downturns.

In addition, looking at the development history of Hong Kong's real estate market, especially in the past 40 years, and comparing with the development of the mainland real estate market and real estate companies, we also discovered the general laws of the development of the real estate industry:

first, In the long run, the two underlying factors affecting the development of the real estate market are the sustained economic growth and the supply and demand gap between land and population. Although the fluctuations in the world economy have affected Hong Kong's economic growth at a certain stage, in the long run, one of the important reasons why Hong Kong's real estate market has been in a continuous rise and even not affected by the epidemic is that Hong Kong has a large population and a small land area, and insufficient supply of housing area. In addition, mainland funds pouring into Hong Kong for property purchases have led to further increasing market supply and demand contradictions, which has led to a continuous rise in Hong Kong's housing prices.

Second, From the perspective of the government's regulation measures on the real estate market, the current main measures of the current real estate regulation policies on both supply and demand are similar, mainly including cooling real estate from the demand side through purchase restrictions and loan restrictions, and cooling real estate from the supply side through sales restrictions and taxation (holding tax, transaction tax). The direct impact of these measures is to reduce the liquidity of the real estate market and increase transaction risks (including real estate companies and real estate speculators), thereby promoting the downward trend of housing prices.

Third, The loose monetary environment is a necessary condition for rising housing prices. The sources of market loose currency mainly include the interest rate cuts of the central bank and the influx of international hot money. The direct result of the loose monetary environment is the rise of inflation . In this process, real estate, as a value-preserving asset, can easily become a hot target for funds, thus bringing a prosperous range of housing prices.

"House to live in" is a basic human need, so real estate is a long-term industry that can span cycles. In addition to the rigid demand for living, real estate also has the characteristics of heavy assets, long cycles, broad industrial chains, and anti-inflation. Therefore, it also shows the attributes of "policy regulation tools" and "investment products" to a certain extent, but this also makes the market's prediction of the direction of real estate operation very complicated.

The last time Hong Kong real estate companies took the bottom of the mainland to buy the bottom of the country was in 2011. Now, it was indeed the turning point of the new economic cycle after the 2008 financial crisis. This time, Hong Kong real estate companies returned to the mainland to buy the bottom of the country. Although we cannot have a certain judgment on the trend of this economic cycle, it is basically certain that the mainland real estate market has indeed entered a new turning point. For the mainland real estate market, in addition to bringing money, Hong Kong real estate companies this time have also brought about the practice of "long-termism" business philosophy in the existing market, which may be more inspiring for mainland real estate companies.