As managing director of Fitness First's operation in Hong Kong, China and Philippines, Andrew Phillips goes to the gym at least five times a week and runs regularly in races with his employees. Joining Fitness First in 1999, he launched a programme to position the gym as his customers' 'third home', after their residence and workplace. The centres are equipped with lounge areas, magazines, computers, televisions and complementary beverages. The busy life of running a chunk of one of the world's largest health clubs - Fitness First has 1.5 million members in 18 countries - means he has little time to study company balance sheets or gather stock tips. As a smart investor who does not bet on anything he is unfamiliar with, Mr Phillips, 36, focuses on property in his home country of Australia, and it works well. Why did you join Fitness First, since the health club business is not that common a career choice? It is exactly what I studied. I had a Bachelor of Applied Science from Ballarat University College (now the University of Ballarat in Victoria), during which I studied the human body. I like the concept of Fitness First, which is to have a healthy body and a healthy mind. I joined Fitness First in Melbourne and then came to Hong Kong about three years ago. Do Hong Kong and Chinese people like to join health clubs like westerners? Generally speaking, the more developed the economy, the more people in the country are health-club members. United States is the leader, where about 15 per cent of the population belongs to health clubs, followed by about 14 per cent in Britain and 12 per cent in Australia. Hong Kong and Singapore are leaders in Asia, but only about 5 per cent of their populations are in health clubs, while in the Philippines and other developing markets it is less than 1 per cent. On mainland China, some cities like Shanghai or Beijing have a lot of people belonging to health clubs, but not the other cities. How do health clubs make money and what are the major challenges in running one? A majority of our income is from membership fees, coaching or the spas. Our membership fees vary from HK$474 to HK$974 per month. We have about 17,000 members in Hong Kong, 6,000 on the mainland and 1.5 million globally. The initial set-up cost is expensive. Each centre requires HK$20 million to HK$35 million to renovate and equip. Rent is also high in major cities like Hong Kong, Shanghai and London. Recruitment is another major challenge because we have to compete for talent with the retail or service industries. What was your first investment and how did it go? What lesson did you learn from it? My first investment was a restaurant in Australia which served trendy, a la carte western food and had a bar. I co-owned the restaurant with another two partners but it failed within 18 months. There were three key lessons. First, we did not have enough capital to ride through the bad times and wait for good ones. Second, I was naive about doing business and did not understand the true value of hands-on management. I was 300km away from the restaurant, working full-time at another job, and left my partners to run the day-to-day business. I relied too much on their performance and did not get my hands dirty enough in the operation. Third, the key person who attracted the customers to come back - the chef - was not one of the partners. We did invite him as a shareholder but it was too late. He lost his incentive and the quality declined. What is your current investment portfolio? My major investment is my share interest in Fitness First. But my other major investments are in properties in Australia. I have half a dozen. I chose property investment because I have no time to monitor the stock market every day. For property, I can choose the property I like according to seven criteria. I will invest only if the property has at least five out of the seven. After the purchase, I can walk away and let the property manager handle the rental income and I can focus on my work at Fitness First. The properties are doing so well that I enjoy a high-yield rental income and capital gain. What are the seven criteria? It must be within 5km of the central business district. It must have a view - of the city, a park or the water. It must absolutely be close to public transport. It must be close to a main road. It must be close to day-to-day amenities such as supermarkets, newsagents, milk bars or post offices. It must be close to a major shopping centre and schools. It must have a unique selling point, such as being 50 per cent larger than the average size. Where did you get these ideas? I listen to people who have investment experience in properties. I learn from their successful tricks and avoid repeating their mistakes. I do not read books or attend seminars. What was your best investment decision? The first property I bought met all seven of those criteria. I bought it at a premium but market prices went up to my buying price five months later. Five to six years later, the capital gain is about 250 per cent. I still hold the property and enjoy the rental income and capital gains go up annually. Have you invested in Hong Kong? I did consider that and almost invested in the hot initial public offerings of Bank of China or ICBC. But I didn't. I must admit I did not know much about the Hong Kong investment market, and I thought I'd better stick to property investment in my home country. Do you worry about the property market collapsing like the subprime crisis in the US? Australia is far more stable than Hong Kong and the US. The Australian property market has had steady growth and I have invested for the long term in order to ride through any down times in the market. Doesn't property investment tie up cash that you might otherwise spend? Yes, I do like to spend, but I also enjoy reserving money for big investments in order to realise gains. I am careful in spending and I do not have a car in Hong Kong, where you can take a taxi or the MTR everywhere. I have a sports car (in Australia) which is beautiful, and I spent a lot of money to purchase it 15 years ago. I was naive in buying it at that time but I still own it. You usually sell a car at a lower value than you bought it, but you can sell property at a higher price some years after you purchase it. Do you think you are rich or poor? I am a long way from where I will end up, but I am well positioned compared with a lot of people. I am incredibly rich in life experience and I am rich in wisdom for my age. I believe the outlook I have makes me feel richer than a lot of people.