Li Ka-shing
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China Property

What else does Superman Li own in China after his 20 billion yuan Shanghai sale?

After this disposal, CK Property owns at least six more commercial buildings on the mainland, each valued at more than 1 billion yuan, according to the Post’s calculations

PUBLISHED : Thursday, 27 October, 2016, 7:07pm
UPDATED : Thursday, 27 October, 2016, 11:08pm

Tycoon Li Ka-shing’s sale of a Shanghai property complex this week is the latest move in almost three years of assets disposal, as he charts his exit from mainland China’s surging real estate market in search of steady cash flow.

Including this week’s sale of the Century Link complex in Shanghai, Li and his family have sold seven large property projects with a combined value of 43.4 billion yuan (US$6.4 billion), according to the South China Morning Post’s calculations based on filings. He hasn’t bought any new land parcel anywhere in mainland China since 2012, according to public company records.

“It’s a good decision, since property prices in China have risen so fast, the upside potential would be limited” if he doesn’t sell now, said Toni Ho, a property analyst at RHB-OSK Securities.

The oversupply in China’s office sector and surging land costs amid uncertain market outlook are also concerns that pushed Li to leave the market, Ho said.

Li and his Cheung Kong Property Holdings Ltd. on Wednesday announced the sale of Century Link for 20 billion yuan, to a company majority owned by China Life Insurance Co., according to filings and people familiar with the sale.

After this disposal, CK Property owns at least six more commercial buildings on the mainland, each valued at more than 1 billion yuan, according to the Post’s calculations.

The largest of the lot may be the Upper West Shanghai, a mixed complex in the city’s Putuo district comprising a hotel, a mall, offices and apartments totalling 1.1 million square meters.

Li, known as “Superman” in Hong Kong for his career of turning most of his investments into fortunes, bought the land 10 years ago at an average floor price of 3,055 yuan per square metre. Analysts value the complex at 24.88 billion yuan, when it’s completed, likely in 2018.

Property prices in the neighbourhood of the Upper West have soared to 50,000 yuan per square metre, agents said.

“It’s highly possible that Li will continue to pare back his holdings, given that he is losing his edge in obtaining cheap land on the mainland,” said David Hong, head of research at China Real Estate Information.

“Many city governments have offered very favourable conditions to attract Hong Kong’s developers to invest,” Hong said. “Now that the incentives have stopped, they have to bid for land on the open market with other mainland Chinese developers.”

Li’s gradual exit from the mainland hadn’t gone unnoticed.

The People’s Daily, the mouthpiece newspaper of the Communist Party, made the point of criticising Li in an editorial for making the exit while China’s economy was going through its slowest growth pace in three decades.

“He shared the prosperity while we had good times but could not beat the odds together with us now that we have difficulties,” the Chinese-language newspaper said on September 21 last year. Li denied that he was abandoning the mainland.

Li’s move is consistent with his strategic shift to focus on industries and assets which bring stable cash flow, such as utilities, while placing emphases on jurisdictions with sound legal system, RHB-OSK’s Ho said.

Besides mainland China, Li is also looking for buyers for his Hong Kong skyscraper called The Center.

Cheung Kong Infrastructure, also controlled by Li, is said to be preparing to bid for a majority stake in British electricity grid operator National Grid Plc’s gas distribution unit, for £11 billion.