Real estate investor’s unbroken record of profitable projects
Stanley Ching heads Citic Capital Holdings' real estate division as the senior managing director. Although the mainland market is slowing down, he says there are still opportunities for investors
Having led the real estate division of Citic Capital Holdings since 2005, Stanley Ching Hiu-yuen has established a track record to be proud of: all the more than 20 projects he has undertaken are making money.
Ching has 21 years of professional experience, of which 18 were in investment management, investment banking and corporate banking with a China focus.
Before joining Citic Capital, he worked for HSBC, Societe Generale Asia and Industrial Bank of Japan.
While pessimistic sentiment clouds the mainland's property sector, Ching still sees investment opportunities across the border.
The market in some cities has been slowing down, reflected by declining sales. Developers have cut prices or launched incentives to boost sales. On the other hand, prices in some cities with strong demand and low inventory are stable. Hefei, in Anhui province, is an example. In future, we will see cities differing in performance. The tier-1 cities - Beijing, Shanghai, Guangzhou and Shenzhen - where many people want to move to, will continue to experience strong demand in the face of limited supply. Some second or third-tier cities with good city planning and sound economic growth will have stable housing markets. Cities without support from local demand will face a problem. We are cautiously optimistic about the market outlook. We do not think it will collapse. From the investment point of view, we may find suitable opportunities.
Dalian is not bad. Many people would like to live there. Chengdu or Chongqing. They are facing a problem of oversupply in the short term, but they are vigorous cities where many people want to go.
If they just read the newspapers, they will worry that the market is going to turn downward. Those who have never entered the mainland are more cautious. But investors who know the market well will see the consolidation as an opportunity. The investors we have met take the more positive view.
Yes, there will be more companies with financial problems. But the government will not ignore the situation as it could turn into a social problem. The housing industry will consolidate, with big developers taking over smaller ones. It is a good opportunity for big developers to increase their market shares.
I believe if the central government had not launched the stimulus package after the previous correction triggered by the global financial crisis in 2008, many developers would have gone bust. The property slowdown this time is the result of the government's efforts to rein in rising property prices since 2010. The market will have a soft landing.
Units will become smaller. In the past, developers built two-bedroom units of about 120 to 130 sqmetres. Now our most popular products are three-bedroom units of about 92 sqmetres. Developers want to ensure a unit's price is affordable for entry-level buyers. Will unit size become smaller in future, like in Hong Kong? That could happen.
We have invested in 3 million sqmetres since 2005. Total asset value amounts to between US$3 billion and US$4 billion.
We have done more than 20 projects and exited most of them. No investor has lost any money on them. All of them made a profit. The performance of our residential funds is the best among our competitors in terms of return. We are confident telling investors they can have attractive returns with good projects and capable fund managers. We are happy with this track record, as we do not want to lose investors' pension money. This is why we take a cautious approach to investment.
The work gives us a lot of opportunities to learn new things, such as different cultures in different regions, because the mainland is so big. That makes our work more interesting even though we deal with real estate every day. We have also noticed that the law cannot protect you all the time. We have learned to be very careful when we structure a transaction. We try to ensure everything is under our control.
