Hongkong Land's record investment in Shanghai

February 21, 2020 16:26
Jardine House, the headquarters of the Jardine Matheson group, in Hong Kong’s Central district. The conglomerate has just announced a major investment in Shanghai, signaling a revived focus on mainland China. Photo: Bloomberg

Hongkong Land, a unit of the colonial-era conglomerate Jardine Matheson Holdings, paid a record 31.05 billion yuan (US$4.42 billion) for a land parcel located at the West Bund area in Shanghai on Thursday. The deal has set a new record for commercial real estate in Shanghai.

Hongkong Land is a major landlord in Hong Kong's central business district, owning numerous Grade-A commercial buildings including iconic properties such as Landmark, Charter House, Exchange Square and Alexandra House.

Now, its big bet in Shanghai is viewed as vote of confidence in the mainland, and represents a shot in the arm for Chinese authorities, who are battling with the coronavirus outbreak.

But the move can also be interpreted as a shift of investments to China from Hong Kong, reflecting a bullish long-term view on the mainland and less positive outlook for the firm's home base.

Jardine Matheson had been one of the biggest British conglomerates in the colonial era. The group was founded in July 1832 by Scotsmen William Jardine and James Matheson.

The latest land acquisition in Shanghai marks a high-profile return to the Chinese city for the 187-year-old conglomerate. The British conglomerate set up a subsidiary in Shanghai back in 1843, and won the first land auction in the city in the following year. In 1876, it built the nation’s first railway, known as the Woosung Road, connecting the outskirts of Shanghai to the downtown area.

Jardine Matheson maintained presence in mainland China until it exited the country in 1949 after the establishment of the People's Republic. Since then, it had made Hong Kong its main focus.

Amid uncertainties ahead of Hong Kong's return to Chinese rule, the conglomerate redomiciled to Bermuda in 1984 and moved its stock listing to Singapore in 1990. But it again ramped up its investments in Hong Kong a few years later.

Its major operating units now include Dairy Farm International -- which operates retail stores including supermarkets, convenience stores and pharmacy outlets across Asia -- Jardine Motors and the Mandarin Oriental Hotel Group.

This article appeared in the Hong Kong Economic Journal on Feb 21

Translation by Julie Zhu with additional reporting

[Chinese version 中文版]

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RC

Hong Kong Economic Journal columnist