As Hong Kong faces the risk of renewed social and political tensions in the wake of a public uproar over proposed changes to an extradition law, a company, Goldin Financial Holdings, announced on Tuesday that it is walking away from a multi-billion dollar land deal in Kai Tak despite winning the rights for the property in a government auction in May.
The firm gave up the land parcel even though it meant it would forfeit a HK$25 million deposit it had put up for the site when it won the auction.
Apparently, the company management believed it was still worth it, suggesting that they believe the losses could be greater if they proceed with the land acquisition and develop the property.
The consensus to abandon the deal was reached at an urgent board meeting of the company called at the request of one of its independent non-executive directors, Abraham Shek Lai-him.
We believe there are two key points that deserve attention in relation to Goldin’s sudden shift from being bullish to turning bearish about the prospects of the local commercial property market within the space of just a month.
First, Shek, who demanded that an urgent board meeting be called to discuss the deal, is also a lawmaker of the Business and Professionals Alliance for Hong Kong (BPAHK) representing the real estate and construction sector in the Legislative Council functional constituency.
Also, he was supposed to preside over the first meeting of the bills committee on the Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation (Amendment) Bill 2019, only to fall by the wayside because the pan-dems refused to recognize his legitimacy.
Then second, according to the explanation of Goldin, it decided to abandon the HK$11.1 billion land deal because “recent social contradiction and economic instability would have negative impact on the growth of Hong Kong commercial property market”.
In other words, to put it more bluntly, the company would rather give up that HK$25 million deposit than continue to commit itself to the costly Kai Tak land development project, in view of concerns about the social and market uncertainties in the days ahead.
The serious clashes between anti-extradition law protesters and the police in Admiralty and Central on Wednesday have, to a considerable extent, proven that Goldin and Shek weren’t being paranoid in having such concerns.
The saga over the highly unpopular legislative push is still pretty much a developing situation, and nobody can tell how things are going to play out eventually.
Besides, as a seasoned insider in the local political circles, Shek is more well-informed than many of us about the latest state of political affairs in the city.
As a matter of fact, despite being a pro-establishment lawmaker, even Shek himself has reservations about the proposed law changes.
He has once raised doubts about whether Hong Kong’s top leader can truly reject any request made by the central authorities for extradition in the future, given that the Chief Executive is appointed by the State Council.
That being said, we believe the society and the administration should both take Shek’s concerns and Goldin’s move serious thought.
If the controversy over the law change continues to drag on, and if neither the government nor the public is willing to budge, we are afraid more and more business firms are likely to follow in Goldin’s footsteps and halt their investment.
Goldin’s decision to withdraw from the land deal at Shek’s urging sends a clear message: fresh social tensions could have an adverse effect on the economy, and nobody wants to see that happen.
That said, given that people in Hong Kong, in general, embrace the ideas of peace, rationality and non-violence, we believe there can be a way out from the current crisis as long as the government is willing to listen to public opinion sincerely.
This article appeared in the Hong Kong Economic Journal on June 12
Translation by Alan Lee with additional reporting
[Chinese version 中文版]
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