23 August 2019
Victor Li says land and residential property are like flour and bread. But more flour does not necessarily mean cheaper bread. Photos: HKEJ,
Victor Li says land and residential property are like flour and bread. But more flour does not necessarily mean cheaper bread. Photos: HKEJ,

Victor Li’s bread and butter is also about flour

It’s in off-the-cuff moments with the media during results announcements that we get the measure of Hong Kong’s industry chieftains.

No matter how good — or how bad — the results, they tend to be more forthcoming after the big numbers and small details are off their chests.

On Thursday, Cheung Kong chairman Li Ka-shing shared some words of wisdom as he typically does during these encounters and Hang Lung Group chief Ronnie Chan gave us his take on the widening anti-corruption drive in the mainland.

But it was Victor Li, Li-Ka-shing’s deputy and elder son, who stole the limelight with some interesting analogy.

“If property is bread, land is flour,” Victor Li said.

He was making the argument that increased land supply will drive down land costs but not residential prices. 

Land prices are just one cost component in the equation. High staff and construction costs and an increasingly complicated system have raised the entry barrier to the property development market, he said.

Although property is the one business closest to his heart, Li said he won’t get too engaged. He compared the business to a factory but the difference is that the latter is subject to greater risks. In that regard, Cheung Kong is more like a contractor, he said.

The elder Li weighed in on the business environment in his chairman’s statement, saying economic and political uncertainty will remain a challenge for the remainder of 2014.

He said weak global economic conditions and government policies and restrictions affected several of Cheung Kong’s markets in the first half but the trend is moving toward a “constructive outlook” for the second half.

Meanwhile, Chan said Hong Kong should stop blaming all its problems on the government and expressed hope Hong Kong people would be more rational.

Then, he had something for the government to chew on. He said recent land tenders were withdrawn with insufficient interest because the government had set too high a price for fear that it was transferring all the benefits to property developers. 

And Occupy Central?

Chan joked that the civil disobedience movement might have scared the bidders away and no one would have made it to the tender anyway if the threatened blockade of the business district by the group had materialized.

Half of Hang Lung’s rental portfolio is in China, so Chan naturally had something to say about the anti-graft crackdown in the mainland.

He said the anti-corruption measures will temporarily impact high-end retail sales but the ultimate outcome is a cleaner society which is essential for sustainable long-term economic growth. This should favor long-term players like Hang Lung.

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EJ Insight writer

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