Nanjing is one of the best bets for future city growth across China, Taiwan is a country on the up and Hong Kong will be back despite a more ‘political’ society which had hampered its progress.[youtube]5opGa5i9z6w[/youtube]
Those were some of the key points made by Justin Chiu, executive director of Cheung Kong at the ‘meet the chairmen event’ on Mipim Asia’s last day. Chaired by Aedas chairman Keith Griffiths and also featuring Gaw Capital Partners’ Goodwin Gaw, Chiu said in the session that Nanjing’s high speed rail links, history and civilised society made it a strong contender as one to watch over the coming years, especially, as Gaw related, given its fast growing population, up to six million. Some 20 cities on the line are going through this change, added Gaw.
Chiu said society is ‘getting more political’ in Hong Kong, with resultant delays to projects. ‘We have not been creating enough land for our future use’, he said. There is still a shortage of Grade A office space. ‘We spend too much time arguing – there’s too much debate going on.’ But he still foresees ‘a lot of opportunities in the next few years. ‘Hong Kong will be on its feet again, don’t worry. I have every confidence in Hong Kong’
Goodwin Gaw – chairman and managing director of Gaw Capital Partners – said the fundamental problem in Hong Kong is an interest rate imported from the US and growth imported from China. But the pace of growth had been problematic: ‘I do feel Hong Kong property prices have gone up too much, too quick. The pace is unhealthy’
For Keith Griffiths, chairman of architect Aedas, Hong Kong work is slowing down, with infrastructure jobs coming to an end and, incidentally, the Middle East representing ‘a complete and utter disaster for us’. Indonesia and Malaysia, are promising hotspots. ‘But really the story for us is in China for the next two or three years, particularly in secondary and tertiary cities.’
Chiu said that across China the picture was one where, on the one hand property prices are high but GDP growth is also very high. Property prices in China in the first three quarters of 2011 rose by only 8.8 per cent, on average, principally because of government cooling measures. But family household disposable income levels rose by 17.8 per cent. So if looking at 2011 alone, the disposable income surpassed property prices. Thus more families can afford to buy their own homes in China and, provided the cooling measures are still in place in three to five years, people in general can ‘really catch up with property prices in China’, said Chiu. He believes the cooling measures will stay in place at least in the next 12 months.
China is basically eight or nine economies in one, said Gaw, so it’s difficult to navigate. But if you do know how to navigate it can be very lucrative. And the scale of growth and urbanisation is daunting. Some 250 million people are expected to move to cities in the next 15 years, with ramifications for spending power and the space that they require, estimated at around 300 billion m2 of space over the next 20 years. ‘Even if you chop that in half it’s a lot of space for Aedas to go and build’, joked Gaw.
Chinese money is going offshore to Malaysia and even places like the UK where a high percentage of new homes are bought by Asians: ‘an easy place to park money’ feels Gaw. ‘But I don’t see a lot of Chinese money going to the US because of tax.’
In terms of prospects for growth and investment Chiu has invested in property companies in Malaysia, and still likes Singapore for its clear regulations. But Taiwan is also ‘worth looking at’, he said, partially because many industrialists who used to have factories in China are moving back to Taiwan.
Gaw agreed on Taiwan, pointing to a disparity between younger ‘kids’ coming back to Taiwan who are more open about displaying their wealth and the unsexy housing on offer in places like Taipei. Gaw’s other tip was to build more high quality retail in China.
And Chiu would agree with that: ‘Its difficult to get money into China but if you have money already in it’s a great time’, he said. ‘It’s a golden time for us.’