China Conference

It’s prudent to mitigate operational risks, former Financial Secretary Leung says

Nan Fung’s chairman Antony Leung says the developer prefers a conservative approach to mitigate risks, instead of rushing headlong into unfamiliar jurisdictions on the One Belt One Road route

PUBLISHED : Friday, 02 December, 2016, 1:29pm
UPDATED : Friday, 02 December, 2016, 11:49pm

Nan Fung Group, the textile producer that morphed into the developer of Hong Kong‘s most exclusive real estate, said it’s more likely to invest in financial papers that underwrite projects along the “One Belt, One Road” route as a way to mitigate operational risks, than actually building properties.

It’s more prudent for the multitude of risks to be divided into investable slices, than for Chinese developers, infrastructure builders and investors to rush abroad headlong into unfamiliar jurisdictions, said chairman and chief executive officer Antony Leung Kam-chung.

“Political risk is one of the most difficult to assess,” said Leung, during the annual China Conference held Friday by the South China Morning Post. “Some countries have higher political risks, while other have lower risks.”

Risks and rewards are key factors for businesses and profit-oriented organisations, when developers and investors gauge the suitability of investing overseas, he said.

Location is not a matter of where it is, but whether its legal system is adequate to protect investors, he said.

There are more than 60 countries along the “One Belt, One Road” with a combined population of more than 4 billion.

For Nan Fung, Leung said the group prefers investing in countries whose legal systems are based on common law, except in mainland China because of the cultural and historical familiarity.

“We are also interested in cities that serve as talent hubs,” said Leung, a former Financial Secretary in Hong Kong before becoming a developer. “We have investments in London and New York, Shanghai and Beijing.”

Property developers should forged ventures with local partners or third parties before investing in unfamiliar jurisdictions such as the Central Asian economies, said Leung, who had a career in finance spanning Citigroup, JPMorgan and Blackstone before his public service as financial secretary.

“Developers will not invest blindfolded because interested parties will do their research by hiring consultancies, banks, lawyers before pouring in their capital,” he said. “ Having a local partner with local connection is also important.”

Leung also advise the young people should set their eyes globally as there are ample of opportunities in worldwide.

Nan Fung, which traces its establishment to a textile factory in 1954, has more than 10 properties in seven cities in mainland China. It’s a co-developer with Wheelock & Co. of the Mount Nicholson apartments at The Peak, which count some of Hong Kong’s wealthiest families among their owners.

In the mid-1990s, Nan Fung began investing in mainland China’s property market and since 2001 has built projects in Beijing, Shanghai, Guangzhou, Wuxi, Dalian, Tianjin and Sanya.

Its mainland portfolio comprises 10 investment properties including DL International Logistic Centre in Dalian, Guangzhou Nan Fung International Convention & Exhibition Centre in Guangzhou and SH Le Rendez-Vous, a low rise retail complex in Shanghai.