After almost 70 years, private, family-owned developer Hip Shing Hong is holding its own against some of the biggest players in the city — largely by keeping true to its mandate and giving itself the freedom to carry it out. At one time a listed developer, Hip Shing Hong re-privatised itself when it realised the organisation could survive without stock market capital and would be more able to dabble in the social enterprises its founders had hoped to, particularly when not obligated to generate revenue.
Hip Shing Hong’s portfolio right now spans all sectors, with its newest boutique hotel, Madera Hollywood, set to open this autumn. A companion to the property in Jordan, the new hotel will be themed to Hollywood glamour but will adhere to Hip Shing Hong’s environment and service quality standards. In the first of two parts, Squarefoot chats with Hip Shing Hong third generation managing director David MH Fong about business and duty in Hong Kong property.
First things first: Who’s taking over after you retire:
My son works here but I have no idea if he’s going to take over or if it will be professionally managed. Whoever takes the position needs to be competent, but the last name isn’t important. It’s not in the best interests of the company if he can’t do the job.
The push-and-pull between publicly listed and private developers is an interesting dynamic in Hong Kong. A lot of people would argue the publicly listed firms are on the hook only to generate dividends and aren’t behaving in the city’s best interests. So first off, what are your responsibilities as a developer?
I think the developer’s job is to develop properties to meet the demands of the city. Prices right now are high and the market sets the price, not the developer. In recent years we’ve seen land shortages that sent prices to record levels, but I think the function is to solve habitation and work problems where there is demand.
Are they producing the right product? Tin Shui Wai was a pretty bad idea.
In that case the combination of affordability, convenience and community vitality are less than what they should be. Likewise in Tung Chung; transport costs are high and so it becomes a matter of where to take the land for urgent affordable housing. For example, should we touch the country parks?
What do you think?
No. The parks are endowed to Hong Kong’s future generations and once it is gone, it’s gone. Once demand is sated you’re no longer under housing pressure. This pressure could be temporary. So if it abates and we took the convenient way out to find land we’ve lost the greenery that a lot of people treasure, including myself. If there’s a better way to do it, don’t do it. There’s no going back.
So whose job is it to provide affordable housing, and where has the creativity in solutions gone? Plenty of the industrial buildings could be residential but it’s all retail, hotels and office. Who’s not thinking far enough ahead?
I think the government sets the regulation and zoning law, so we actually have our hands tied. They could take the lead — study the pluses and minuses of each policy, but they tend to react conservatively. The planning guidelines have been around for years and there is no substantial public pressure to make a change. If there is, then there are reviews, studies, public consultations, and legislation and so on. So there’s a lag between what the market wants and regulations in general. City planning and zoning are long-term endeavours. And they change their minds and could often argue against themselves [Laughs]. It’s a very slow, painful process.
So what are developers here doing right?
We also have developments in the United States, and compared to the process there, Hong Kong is relatively easy as far as approval processes go. In the US there are lots of people that will fight you, lawsuits and so on. Hong Kong is very easy. The land is very expensive so developers can hire good architects and do interesting buildings. The land in the States is a lot less expensive so the structure can be very pricey too. They’re not directly comparable but if you ask what we’re doing right I’d say we’re responding to the market right, and responding rapidly. The development cycle here is short; two to three years where in the US it can take five or 10. And of course in terms of high-rises and property management we’re doing well.