Link Reit hopes to ride suburbanisation wave in mainland China
Link Reit chief executive officer George Hongchoy looks forward to expansion on the mainland, with particular focus on suburban development resulting from new infrastructure
George Hongchoy Kwok-lung joined Link Management, the firm that manages The Link Reit, as chief financial officer and an executive director in 2009. Hongchoy, 50, has been chief executive of The Link Reit since May 2010. Before joining the real estate investment trust, he was managing director of DBS Asia Capital from 2004 until 2008. Hongchoy has been active in promoting Hong Kong reits and pushing forward The Link Reit’s expansion into the mainland.
What are the reasons behind the company’s move into the mainland?
Some investors have raised concern that investing on the mainland is risky. But [just] staying in Hong Kong is more risky. In the past, the city’s development focus was on the eastern part. But ongoing infrastructure developments in the western part increase integration between Hong Kong and other parts of the Pearl River Delta region. Hong Kong’s role is changing. Meanwhile, most of our customers go to the mainland, mainly the Pearl River Delta. We have to go to the mainland if we follow our customers. We also need to go from the political and economic integration perspective.
How do you assess the investment risk when your company makes the move, as The Link Reit has no track record of success on the mainland?
When we listed in Hong Kong eight years ago, investors could not predict the return we have achieved today. Some investors have asked if we are too late in going to the mainland, as many players are already there. But the trend [of development of suburban districts through improved infrastructure] just started a few years ago. Probably they were too early; we are not too late.
Now the time is right, as better infrastructure [with the construction of metro systems] in the cities creates suburban districts, and the size of the middle-income class will continue to grow and it will become mainstream by 2020. That will require retail space to cater to their districts. And we have strength in this area. With the development of urbanisation, I see there are many opportunities. Middle-income people move from downtown to well-developed suburban districts because of improved infrastructure. It is like the development of Tseung Kwan O in Hong Kong. It will be a similar story on the mainland.