Date
25 July 2017
HNA Group has outlined ambitious plans for a large residential project in East Kowloon after snapping up four sites near the old Kai Tak airport. Photo: HKEJ
HNA Group has outlined ambitious plans for a large residential project in East Kowloon after snapping up four sites near the old Kai Tak airport. Photo: HKEJ

The rise of HNA Group

For HNA Group, the new star in Hong Kong’s property landscape, scoring a hat-trick is clearly not enough when it comes to bagging prime sites. How about a fourth win in less than five months? 

Well, that’s precisely what the Hainan-based conglomerate did Wednesday as it scooped up another plot of land near Hong Kong’s old international airport at Kai Tak. 

The company, which controls Hainan Airlines among various other businesses, outbid several firms to win its fourth Kai Tak development site, in a deal worth HK$7.44 billion.

Outlining the logic behind the aggressive bid, the Chinese group revealed that it aims to combine all its four sites in the area to develop a top-class integrated residential complex.

If the plans go off without a hitch, the group will end up with an L-shaped kingdom in East Kowloon.

Since winning its first Kai Tak tender in early November, HNA has spent a total of HK$27.2 billion to acquire property in the key development zone.

With the high-profile acquisitions, the Haikou-headquartered group has become a major talking point in the market.

Given its willingness to pay high prices, some observers fear HNA could be fanning the flames in the already red-hot housing sector.

Government authorities, however, will no doubt be thankful to the firm given the fact that HNA has accounted for more than half of the estimated HK$52.7 billion in land premiums paid by mainland developers in the current financial year that began on April 1, 2016.

Overall, the mainland group has contributed 27 percent of the total land premium amount this year, becoming the single largest source of income to the treasury among developers.

HNA, in fact, is a latecomer to cross-border land acquisitions in Hong Kong, a game which started some 30 years ago.

But once it joined the push, it moved quickly. The rush for overseas assets was prompted, among other factors, by a need to hedge the bets amid the possibility of further slide in the renminbi’s value back home.

Last June, the conglomerate took over Tysan Holdings, a listed construction company, from Blackstone before making a big move in the Hong Kong property market.

HNA paid HK$4.52 per share to secure 66 percent control in Tysan, which has since been renamed Hong Kong International Construction Investment Management Group.

Hong Kong International Construction has now been used for purchase of the four Kai Tak sites.

Despite paying headline-grabbing prices, the listed arm has a market capitalization of only around HK$4.2 billion.

There is no doubt the group has large-scale ambitions in the Hong Kong property market. 

It paid an average of HK$13,500 per square foot for a two-million-square-feet portfolio that it hopes will create a new landmark in integrated residential complex development.

In the latest tender, HNA paid a whopping premium to outbid 14 rivals that included Sun Hung Kai Properties, Cheung Kong Property and mainland developers such as China Resources Land and Vanke Property – to name just a few.

HNA Group emerged from Hainan Airlines, the fourth national carrier in China. After its founding in January 2000, the group saw Chairman Chen Feng embark on aggressive diversification, leading to presence in multiple industries such as tourism, logistics and property.

In July 2016, the group ranked 353 on Fortune 500 companies with revenues of US$29.56 billion, after rising 111 places on the list.

In the last two years, the conglomerate turned even more aggressive with seemingly unlimited war-chest.

Asset acquisitions included names such as Ingram Micro, an American information technology group; Carlson Hotels, which owns the Radisson brand; and a 13 percent stake in Virgin Australia.

This month, HNA Group took a 3 percent stake in Deutsche Bank, and vowed to boost the holding further.

The Hong Kong land deals, in the overall scheme of things at HNA, represent just a piece of the cake.

The group, for sure, has plenty to crow about. 

– Contact us at [email protected]

BK/AC/RC

EJ Insight writer

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