Hysan's Lau Siu-chuen remains optimistic despite challenges
Lau Siu-chuen hopes to create a different Hysan by enhancing the attractiveness of its retail premises and tapping the opportunities arising from the relocation trend in the office sector
It was a familiar environment for Lau Siu-chuen when he took up the post of deputy chairman and chief executive of Hysan Development in 2012. He was the group's acting chief financial officer in 1999.
After his spell as the group's finance head, Lau served as a management consultant at McKinsey & Co, a consumer analyst at Morgan Stanley Asia and a brand manager of French luxury products.
This background equipped him well to forecast a slowdown in retail sales two years ago when other developers were expecting the boom to continue.
With his deep experience in and knowledge of the retail industry, he has guided Hysan towards strategies aimed at coping with the changes unfolding in the market.
What made you feel the growth in retail sales would slow two years ago?
Hong Kong's retail sales had maintained rapid growth since 2003. The growth would normalise some day. It is a law of nature.
We also saw that the central government had released its anti-corruption campaign. And there are alternatives for mainlanders who want to go shopping. Some may like to go shopping in other cities after having visited Hong Kong frequently over the past decade.
Our company has an analysis model to forecast market trends.
What have you done to cope with the change in the retail market?
Since we believe the growth in retail sales will slow, we have raised the base rent of the retailers that are economically sensitive.
How would you enhance the attractiveness of Hysan Place in Causeway Bay when some leases scheduled for renewal expire next year?
We are continuing to fine-tune Hysan Place. Since we used to have more shops targeting women customers when Hysan Place opened, we will have some new shops tailored to men's interests.
Hysan Place introduced some brands that had not yet opened stores in Hong Kong. We are now trying to introduce tenants that have recently expanded in Hong Kong and are not completely new to the city's shoppers.
What is the outlook for the office market?
It depends on Hong Kong's gross domestic product growth. Hong Kong is expected to achieve 3 per cent growth in GDP this year, which means office rents will be more or less stable.
The office market recorded a modest net take-up of about 300,000 sqft so far this year, compared with the average annual take-up of 1 million to 2 million over the past few years. That is because multinational firms are rethinking their businesses following the bankruptcy of [United States investment bank] Lehman Brothers in 2008. Some financial institutions are downsizing.
Many multinational financial institutions are questioning whether it is necessary to have an office in Central. Some have begun to relocate to other districts. We have seen a growing interest from companies in Central in the office floor at Hysan Place since last year. The trend of relocation will continue. That is why we are redeveloping Sunning Plaza and Sunning Court.
What were your priorities and targets when you rejoined Hysan in 2012? Are you satisfied with the performance so far?
I was appointed chief executive in May 2012. Two months later, I set a strategic tree plan. I set goals, vision and how to achieve the goals. The aim is to achieve stable growth in total return.
My priority over the past two years is to increase the yield of existing assets. It is our core business. We have been positioning our offices and rebranded Lee Gardens. We took small steps. But it made Hysan look different from two years ago. We have achieved our targets.
Three years later, you will see a different atmosphere at Hysan Avenue. The extension of Lee Gardens One will be completed in 2016 and the flagship stores of the first-class luxury brands will be opened. You will also see Ralph Lauren's flagship store at Lee Gardens Two and some luxury stores at the redeveloped Sunning Plaza and Sunning Court.
Will Hysan acquire new projects? If so, what kind of projects are you looking for?
Our balance sheet is very strong. If we want to achieve steady growth, we have to think years ahead. We have begun to look for investment opportunities on both sides of the border.
Since we usually manage a property over a long period of time, the entry price is very important to us and cannot be too high. I think we will have some opportunities in Hong Kong in the coming two to three years.