Wang On hoping to buck retail gloom with Ginza-style projects

Developer sees enough opportunities for long-term growth despite sluggish retail sector

PUBLISHED : Tuesday, 23 August, 2016, 1:55pm
UPDATED : Tuesday, 23 August, 2016, 7:28pm

Wang On Properties, a developer known for its boutique residential flats, is now banking on so-called “Ginza-style” commercial projects in busy shopping districts, to counter the lingering downturn in Hong Kong’s retail sector.

Named after one of Tokyo’s busiest shopping streets, Ginza projects are commercial properties where two businesses share the same space. The term was coined when sky-high retail rents for street-level shops forced stores in the city to move upwards, to offer more affordable space.

Faced with the current grim retail outlook and lacklustre economy, Wang On’s chairman and chief executive Gary Wong Yiu-hung said the concept offers great opportunities in Hong Kong.

He also told South China Morning Post he is confident of identifying some “bottom fishing” investment opportunities that will provide ample gains in the long run.

“The Hong Kong economy will never hit a dead end. The short-term gloom will not develop into a long-term one and there are still enough opportunities for growth,”said Wong.

“We accumulated shops in the city between 2004 and 2008, and actually things turned out well. We made that move when sentiment was extremely bearish,”he said.

The property arm of local corporate giant Wang On Group has emerged from the shadows to be an active bidder for government land sales, and has already locked horns with several big developers for prime spots at auction.

The Hong Kong economy will never hit a dead end. The short-term gloom will not develop into a long-term one and there are still enough opportunities for growth
Wang On chairman and chief executive Gary Wong Yiu-hung

Listed on the main board in April, the company has also seen a fairy-tale ride for its shares, which have surged nearly 1,002 per cent since debuting.

HK’s securities regulator, however, later warned investors to exercise “extreme caution” when trading in the stocks, as it believed they were controlled by a group of around 20 investors.

Last week, buyers snapped up all 260 units of the company’s first batch of small-to-mid sized flats in The Met Blossom project in Ma On Shan, most of which are priced at HK$3 million or below.

The first batch had been 6.7 times oversubscribed, topping market estimates. The entire project has 640 units

Though its roots are deeply entrenched in the housing market, Wong said the company is now mapping out its plans for Ginza commercial properties, which will see a mix of mass-market restaurants, lifestyle and beauty retailers, as well as high-rise upper-floor space.

This type of property first started springing up in Hong Kong a decade ago, an early example being the Soundwill Holding project on Sharp Street in Causeway Bay.

“Returns from our Ginza-style sites on Nathan Road have been subject to the slower overall economic environment, but we will be able to capitalise on them when the market picks up,” Wong said.

“Facilities located in vibrant shopping districts still present decent returns on rental income.”

Nathan Road is Kowloon’s main thoroughfare and one of the city’s most prosperous tourist areas. In the post-World War II years, it became known as the Golden Mile.

Wong said it has taken a while for Hong Kong to become a destination of choice for visitors from regions other than the mainland.

He added that sound property investment strategies have parallels with trading shares on the stock market.

“Some companies believe there is still a lot of room for prices to decline. We see this as a window to acquire assets at lower prices.”

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