Developing global ambitions

Peterson Group had managed to keep a low profile for most of its 54-year existence. But that changed in 2009 when the privately run developer was linked to the controversial 39 Conduit Road project in Mid-Levels, a joint venture with Henderson Land Development.

The luxury development swelled the company's coffers, but it also put it under the public spotlight due to the marketing tactics used to sell the flats.

"I am not sure if we are lucky or unlucky [to have invested in this project]," said Tony Yeung, managing director of Peterson, the third generation of his family to have run the company.

Yeung, who was educated in Canada, said the company was now quitting the local development business that built its fortune as it accelerates plans to become a global developer.

Dubbed the king of buying old buildings, Franco Yeung, the chairman of Peterson and father of Tony, formed a 40:60 per cent joint venture with Henderson Land chairman Lee Shau-kee about 20 years ago to buy the property on the site the 39 Conduit Road development now occupies. Lee sold the interest to his listed vehicle Henderson Land in early 2000, with Peterson owning the remaining 40 per cent interest.

Franco Yeung and his family are the 43rd on the list of Hong Kong's richest people, according to Forbes magazine.

In October 2009, Henderson Land, which built and marketed the luxury development, trumpeted the sale of 24 flats at the building. But in June 2010 it said 20 of the deals had fallen through - among them the world-record HK$439 million sale of a top-floor duplex. The marketing tactics of the project were criticised when it was revealed the developer had skipped the 48th floor in the numbering of the building, presenting it as taller than it was.

Henderson Land early this month relaunched the remaining unsold units at the building, taking advantage of improved market sentiment.

Apart from this development, Peterson has been involved into a number of projects, such as Double Cove in Ma On Shan, with Henderson Land. Media had speculated that Peterson worked for Henderson to buy sites for redevelopment.

Tony Yeung denies this. "We are not agents. We have never worked for any developer to buy ownership for redevelopment. We bought sites and looked for partners," he said.

He said the company had not acquired any old buildings in the past three to four years. "We are quitting the market," said Yeung, citing the need to diversify due to changes in the market.

"It is not easy to make a profit from this business in view of rising home prices and the increased number of players. Meanwhile, the government's aim to increase new flat supply also makes buying old sites for redevelopment less profitable."

To reduce its reliance on the local property business, Yeung said the company had diversified into the hotel business, including LKF Tower in Lan Kwai Fong, as well as investing overseas.

In March, the group bought the Ampersand building in Oxford Street, London, for £121 million (HK$1.5 billion). It is being refurbished, with the work to be completed by the end of next year. This project marked the start of Peterson's British strategy and the group has completed three other projects there.

The latest investment is in London's Hadley Property Group. Yeung said the group would use its niche in property and the Asia market to supplement the residential development business of Hadley. The stake purchase in Hadley will enable Peterson to spend up to £100 million on residential projects in the British capital.

Yeung said the development strategy was in line with the company's diversification philosophy. Founded by his grandfather in 1959, the firm initially focused on exports of embroidery, tablecloths and handkerchiefs from the mainland.

In the early 1980s, Franco Yeung took the helm and diversified the business from trad-ing to buying old buildings for redevelopment.

Tony Yeung still guards his family's privacy zealously. In his first interview with any media outlet, he declined to be photographed. "We do not want to draw the general public's interest. We just want to get the business done well," he said.