Relationship-wise the powers that be at Sun Hung Kai Properties have been having a hard time of late. But all-in-all the family feuding isn’t proving too bad for business, writes Jane Drew
Until a few months ago, the name Sun Hung Kai Properties (SHKP) was synonymous with Hong Kong’s finest landmarks – including the International Finance Centre and the upcoming International Commerce Centre – and with some of the city’s most luxurious residential developments, like The Harbourview and 8 Deep Water Bay Road. But today of course when you think about SHKP, you focus on the Kwok brothers, the three men at the helm of the HK$325 billion property empire, and their highly publicised feud.
Battle lines were first drawn – or at least brought to the attention of the press – on February 18, when the company issued a surprise statement saying that chairman Walter Kwok Ping-sheung was taking temporary leave. Boardroom drama quickly escalated into courtroom drama. Rumours began to circulate about internal power struggles and Walter’s alleged plans to bring his mistress, Ida Tong Kam-hing onto the SHKP board – a move that was mooted by both his mother, Kwong Siu-hing and two younger brothers, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen.
On May 27, Walter was officially demoted from chairman and chief executive to non-executive director after 18 years in the job. He is looking at a salary cut of 95 percent, from HK$2.06 million a year to HK$100,000 a year. His 79-year-old mother will serve as the new chair until the next annual general meeting in December, when market watchers expect Raymond, the youngest of the Kwok brothers and co-vice chairman of SHKP, to take the reins.
Whether or not Walter suffers from bipolar affective disorder as was reported in the courts, and whether or not he has made a series of bad management decisions of late, Madam Kwong seems to have the support of the company, co-founded by her late husband Kwok Tak-seng in 1963.
Sixteen of the 17 board members voted in approval of her taking the chair. One reason for this show of confidence, of course, is that Madam Kwong has over 40 years of experience with real estate and is the controlling shareholder of the company. Also, in a town where family dynasties are commonplace, especially in the big property firms (think Henderson Land Development, Great Eagle Holdings, Wheelock and Co. and Hysan Development), it could simply be a case of everyone believing “mother knows best”.
Raymond has insisted all along that the daily routines and business strategies of the company would not be affected by family politics. But it may come as a surprise to some that it really does seem to be business as usual at SHKP.
SHKP shares have been on the up ever since it became clear that Walter was on his way out. What’s more, a 5,067-square-foot SHKP-built house (No. 2) at Severn 8 on the Peak recently sold for HK$285 million, or HK$57,000 per square foot, a record for Asia as well as Hong Kong.
Only last December, House 15 in the same development, sold for the then record-breaking sum of HK$240 million, or HK$55,491 per square foot.
Severn 8 has been good to SHKP: of the 22 houses that make up the development, all but one has been sold. Homes range in size from 3,330 square feet to 5,100 square feet. After the record-breaking sale of House 2, the firm is likely to raise the price of the remaining house (No. 23) by 10 percent. Interested parties should note that in order to even view a house at Severn 8, a bank order of HK$100 million is required as deposit.
Perhaps the old adage is true – there is no such thing as bad publicity. Certainly SHKP seems to be taking all the tabloid gossip in its stride – just as it did in September 1997 when Walter was allegedly kidnapped by “Big Spender” Cheung Tze-keung. It’s said that Walter was released after a ransom of HK$600 million was paid but the family has always refused to comment on the matter.