Gale Well Group made a few key decisions that helped the Hong Kong-based property investment firm grow its once-small portfolio to its current size of HK$35-40 billion.
In interviews with the media, founder Jacinto Tong Man-leung recalled how they made some huge investments more than a decade ago.
“My sister decided to invest only in parking space,” said Tong, noting that car parks were in excess supply and numerous developers were eager to sell, offering an opportunity for buyers to snap up assets on the cheap.
Gale Well secured 604 parking spaces in such buyer’s market between 1998 and 2001.
Then came a brief economic crisis triggered by the SARS outbreak. Property prices plummeted and the market was flooded with foreclosure homes offered by banks.
Gale Well seized the opportunity and moved into commercial properties.
Not many people predicted then that the city’s economy and property market will stage a powerful rebound afterwards, or the huge asset price jump following quantitative easing moves by the US.
The Gale Well story reminds me of similar stunts pulled off by Asia’s richest man, Li Ka-shing.
“One of the reasons that Mr. Li is very successful, one is timing. He buys when the markets are flat, because he has a good balance sheet. And second, speed. Good deals do not stay around for long time, everybody wants them. So a man who acts quickly, and makes the decision quickly, he can get the good deals. And his story is about a series of good deals,” according to Simon Murray, who helped Hutchison expand its businesses.
Amid uncertainties from talks between China and Britain during 1982 and 1983, Li bought four berths at Terminal 6 for just around HK$100-200 million, when other investors stayed away.
By the time when Hong Kong’s handover negotiation was done and confidence largely restored, the price of Terminal 7 had soared to HK$4 billion.
These are all great examples that show the importance of being greedy when others are fearful.
This article appeared in the Hong Kong Economic Journal on Feb. 22
Translation by Julie Zhu
[Chinese version 中文版]
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