Chairman builds a rock-solid foundation
Lui Che-woo wins recognition for turning his company into a major player in the competitive property market, writes Amanda Lee
Lui Che-woo, chairman of KWah Group, has been named this year's Business Person of the Year in the DHL/SCMP Hong Kong Business Awards held at the Grand Hyatt.
His latest triumph is the culmination of a series of important business deals - spearheaded by Dr Lui - which has earned the group significant profits this year compared to previous years.
For the first six months of the year, ending June30, the company's gross profits soared to HK$471.78million compared to HK$93.82million last year.
The group's property developing arm, KWah International Holdings, made headlines in October after it teamed up with property developers Sino Land and Nan Fung Development to outbid several leading rivals for the 68,922 sqft building site in Aberdeen at a record breaking price of HK$5.71billion for Hong Kong Island, except Island South and The PeaK The site is slated for the development of luxury residential flats, managed solely by KWah, and covering project management, finance and architectural designs.
KWah is keen to form partnerships to outbid larger competitors. 'As a medium-sized property developer in Hong Kong, we look for property sites that are valued somewhere between HK$4billion and HK$5billion,' Dr Lui said.
'I think KWah is quite fortunate to have come this far, even though the company is not as large as some other property developers. I believe we have a strong foundation in the property market and the experience to continue to build on the fundamentals in the long term.'
What matters to Dr Lui is quality. 'For me, quality is of the utmost importance when it comes to property development. The materials that KWah selects for its projects are of the highest quality, whether they are for residential blocks, hotels or offices. Our construction, like our company, is built to last,' he stressed.
Listed in Hong Kong since 1987, KWah came into the limelight over the past few years as a major player in the property market, with several luxury housing projects completed in some of Hong Kong's prime locations.
Wan Chai's JResidence and Sha Tin's Great Hill are high-profile residential projects which will provide the group sales revenues of HK$2.5billion by the end of this year, according to KWah Group.
Situated in Johnston Road, JResidence has a gross floor area of 240,000 sqft, featuring 381 studios, and one and two-bedroom flats. The property developer is due to open the Great Hill in Tung Lo Wan Hill Road in Sha Tin in the first quarter of next year. The residential project has a gross floor area of 313,000 sqft and includes 53 penthouses and eight houses.
Apart from the waterfront residential joint venture, located in Welfare Road in Aberdeen, KWah has collaborated with property developers in other projects in Hong Kong. It is working with Sino Land, Nan Fung Development and USI on a 450,000 sqft building site in Tai Po. There is also another luxury residential project in Hoi Wang Road in the West Kowloon integrated business district, which has KWah joining forces with Sino Land, Nan Fung Development and Chinese Estates.
'Hong Kong is still the major focus for the future direction of our company. We also have plans to develop properties in first and second-tier cities in China,' Dr Lui said. But unlike the projects in Hong Kong, KWah is likely to go solo to pursue mainland opportunities.
KWah has been active in the mainland property market since the early 1990s. This year, the first phase of the large-scale residential project, located in Da Ning International Community in Shanghai Westwood, generated total sales of HK$1.5billion in the first two quarters. The second phase, featuring 1,059 units, is to be completed in the last quarter of 2008. There are two further residential developments in Xuhui and Jingan, which are scheduled to be finished in 2009.
The group's property arm also hit the headlines this August with a 206million yuan bid for Huadu in the north of Guangzhou, one of the busiest air terminals and shipping ports in the mainland.
The building site in Jianshebei Road, with a gross floor area of 490,000 sqft, has been earmarked for residential development. It is an addition to KWah's existing portfolio of projects in the Huadu District, including hotels and offices.
In the next three years, a total gross floor area of approximately 10million sqft will be coming into the market in Hong Kong, according to the government. KWah, which also operates quarries in Hong Kong, will naturally be keeping a close eye on these developments. Substantial profits can be made from rental income, such as from the 100 per cent leased Shanghai KWah Centre. With other projects, such as the soon-to-be completed J Senses, the company's overall rental revenue is expected to increase by 30 per cent in 2008.
Dr Lui believes its existing network in the mainland puts KWah in a different league, compared with other Hong Kong property developers that have been active in the mainland lately.
'Early development in the property market in China was not straightforward. There were difficult times and the company posted losses in some projects. But we were determined to stay the course and we have persevered,' Dr Lui said. 'We have always envisaged ourselves to be major players in the property market in China. I think this has earned KWah a lot of respect as an organisation.'
The group is now able to allocate more than HK$10billion for future property investments after it sold 452,500,000 shares of Galaxy Entertainment, its entertainment arm, to private equity group Permira Funds in October this year. Although the supply of land in Hong Kong is unlikely to meet the growing demand, Dr Lui believes there is still room for growth.
'Although the amount of land available ... in Hong Kong is decreasing, I believe there are projects that we can launch.'