Return to 1958 and build a century-old giant

Chapter 312: New Direction in Real Estate

"Container terminal?" Yang Wendong frowned and said, "Mr. Bao, the resistance to this matter is very great, and we basically have no benefit from it;

The wharf is the core interest of the Hong Kong government and the core interest of British capital. We are unlikely to interfere."

During the British colonial era, the Hong Kong government allowed Chinese and British capital to compete “fairly” on the surface, but this was just talk.
In fact, most core areas, especially those that make money easily, are controlled by British capital, such as ports, power generation, aviation, telephone, finance, etc.

Although Chinese capital can participate in a small number of monopoly industries, such as China-Pakistan and some financial companies, these are also industries that British capital looks down upon or misses. By the time they are discovered, Chinese capital has already grown in scale, and the scale is not large. Considering the maintenance of the "fairness" principle, they just turn a blind eye.

But if Chinese capital in these areas becomes larger and threatens British capital, it will be suppressed, such as banks.

Ports are also something that the British Hong Kong government attaches great importance to. After all, Hong Kong was founded on port trade. Even though Hong Kong's industry is now gradually developing, it still needs to rely on port transportation. It can be said that they earn money without doing anything that is the result of the hard work of all the Chinese. Even Yang Wendong was also sucked a little bit of blood.

It was not until the 80s that the mainland, with the support of Hong Kong Chinese capital, was able to get a share of the pie.

Pao Yu-kong said with a smile: "I know, but I have never thought about participating in the interests of the port. I just thought that if Hong Kong can containerize its ports, it will definitely stimulate trade and be of great help to the shipping industry."

Yang Wendong nodded and said, "It's not bad to see this, but how do we promote it?"

Bao Yugang said: "I plan to connect with several shipping companies in Hong Kong and make suggestions to the Hong Kong government. With so many of us together, the Hong Kong government will definitely take it seriously."

Yang Wendong shook his head and said, "Bao Sheng, the Hong Kong government is not stupid. Containers have already begun to appear in Europe and the United States, and the effect is very good. Do you think the Hong Kong government doesn't know?"

Bao Yugang replied: "Mr. Yang, what you mean is that the people behind the three docks, Huangpu, Jardine Matheson and Swire, will object?"

Yang Wendong said: "It's hard to say. The interests are too great. And it's not just capital. The government also has to consider the employment of many people. There are tens of thousands of workers at the docks, and they are all tough guys. If they suddenly lose their jobs, what do you think will happen to them?"

Bao Yugang said: "The construction of the container terminal is a long process, it is not possible for them to lose their jobs immediately."

Yang Wendong smiled and said, "That's true, but once it starts, these people might cause trouble. With tens of thousands of young people, the Hong Kong government probably won't dare to mess around with this kind of thing."

Bao Yugang said: "I have also considered what Mr. Yang said, but the development of containers is also the general trend."

Yang Wendong shook his head and said, "That's true, but how to safely convert the Hong Kong dock into a container dock is definitely an extremely cumbersome matter. Not to mention Hong Kong, even the Port of London in the UK cannot be converted now.

Millions of canal workers, this phrase is not just a joke, all ancient dynasties were constrained by this.

And don't forget that Governor Robert Black will leave Hong Kong in a year. If you were him, would you do something that offends several British financial groups and tens of thousands of young people in your last year in office? And then benefit Hong Kong in the next ten years?"

Bao Yugang paused, then said: "Mr. Yang is right. I have to think about it again."

Yang Wendong added: “In fact, if we wait another year until the new governor arrives, his term of office will generally be ten years, and he will definitely want to do something great;
Moreover, the promotion of containers will become easier as time goes on, because more places will use containers, and Hong Kong will have to invest if it wants to trade. Officials prefer to force reforms silently, rather than taking the initiative. If something goes wrong, they will be held responsible.”

Bao Yugang was a little surprised: "Mr. Yang, it seems that it is a pity that you don't become an official."

"Haha, just talking casually, don't take it seriously." Yang Wendong smiled.

After seeing a certain name, he naturally understood a little more about these things.

As for the container terminal, he had actually already made plans. The first step was to stock up on land in the surrounding area. Nowadays, the economy in Kwai Chung is still very average and various plots of land are not very valuable. The cost of purchasing some old building properties or buying land in the name of warehouses is not high.

After the container terminal project is approved, regardless of whether we can take over part of the terminal, the value of the surrounding land will always increase, and we can also enjoy the economic benefits brought by the container terminal for a long time.

Bao Yugang nodded and said, "Then let's wait another year. This amount of time is not a big deal. Then we can push this matter forward together?"

"Let's talk about it later." Yang Wendong thought for a moment and said, "Let's go to the graduation ceremony first."

Under the current circumstances, the later the container terminal arrives, the more advantage it will have for him, so he is not in a hurry.

"Okay." Bao Yugang also saw that Yang Wendong had other ideas, so he didn't ask any more questions.

In the afternoon, after Yang Wendong returned to Changxing Building, he called Zheng Zhijie, who was in charge of the real estate business.

I asked, "How is the recent acquisition of new Carrefour properties and land?"

Zheng Zhijie replied: “Mr. Yang, in the past three months, I have acquired three more plots of land in Hong Kong Island, and seven plots in Kowloon, a total of 3 plots, and I have already started to build properties;
The property in Kowloon is being built quickly and is expected to open in March or April, while the one in Hong Kong Island will be slower.”

"Why?" Yang Wendong asked back.

Zheng Zhijie said: "Because I discussed with Mr. Liu, Hong Kong Island has a rich economy and a large population, so we can build a small shopping mall with Carrefour as the core.

But the situation in Kowloon is much worse, so we plan to build a supermarket directly.”

"Well, OK." Yang Wendong nodded and said, "Then build more supermarkets in Kowloon as soon as possible."

"I understand." Zheng Zhijie added, "However, the expansion of Yifeng Supermarket of Jardine Matheson has slowed down recently. Mr. Liu investigated and found that it was because of its large scale that many problems arose in material supply, warehouse statistics, and product prices. They had to slow down their pace."

Yang Wendong smiled and said, "It seems like they have learned a lesson. It's not easy to run a good supermarket."

Not to mention the current wild era when supermarkets have not yet started, even decades later with abundant logistics and powerful Internet information channels, many people who open supermarkets will end up losing money.

In this era, there were no computers or efficient communication modes, and everything had to be calculated manually. Even Walmart and Carrefour had to explore step by step.

"Yes. So in the short term, the threat from Carrefour is not that big." Zheng Zhijie said with a smile.

"We still can't underestimate it." Yang Wendong added: "We just need to follow our plan. If Zhidi wants to expand quickly, let him do it."

The biggest cost in the service industry is still land rent. If Jardine Matheson is determined to open a supermarket, then the current problems can be solved slowly.

Therefore, Yang Wendong is also waiting for the upcoming real estate crisis. Once the real estate crisis breaks out, Swire will suffer heavy losses, and the support will inevitably be reduced.

The most important thing is that they can take the opportunity to expand their scale, whether it is real estate or the supermarket itself
Zheng Zhijie smiled and said, "Okay."

Yang Wendong asked again: "Is Changxing Real Estate still continuing to acquire properties recently?"

Zheng Zhijie said: "Yes, but according to what you said last time, we have already reduced the scale of acquisitions. At present, in addition to cooperating with Carrefour, we are only acquiring street-side shops and some high-quality office buildings in Hong Kong Island."

Yang Wendong thought for a moment and said, “Except for the properties that are needed by Carrefour or other sister companies, all other matters will be stopped, and we can continue the discussion if necessary.

I need you to mobilize funds and focus on investing in Kwai Chung District, but not in newly built properties, but in acquiring land or old buildings near the seaside, whether industrial or commercial. Once you have acquired them, we will talk about it first."

The real estate crisis broke out in 66, but in 65, starting with the run on Hang Seng Bank, Hong Kong's real estate industry fell into a state of stagflation and gradual decline.

Therefore, the real estate market will only last for two years, and I will have to limit my reckless real estate investment in the past few years. When next year comes, I will start selling some non-quality properties to cash in, and then wait for the crisis to break out.

"Invest in Kwai Chung?" Zheng Zhijie asked in confusion, "Mr. Yang, are you planning to build an industrial park in Kwai Chung similar to Kwun Tong that can accommodate 10,000 people?"

Yang Wendong shook his head and said, "No, but I am optimistic about the development there."

Once the construction of Kwai Chung Terminal begins, a large amount of capital will flow in, so there is no need to wait until the terminal is actually opened. As long as the Hong Kong government announces the construction of a container terminal in Kwai Chung, the land price will inevitably rise sharply.

The stimulating effect of Kwai Chung Wharf on the economy is far greater than that of its own "10,000-person industrial park".

And because of the capital nature, it may be difficult for you to directly share the benefits of the container terminal, but as long as you own a large piece of land behind the terminal in advance, it will be almost the same.

Zheng Zhijie nodded and said, "Okay, the land price there is very cheap anyway."

"Yeah," Yang Wendong nodded.

The land in the marginal areas is very cheap now, and almost no one is interested in buying it. In this case, even if a real estate crisis breaks out, how much lower can the price go? It has already fallen to the bottom.

Zheng Zhijie said again: "Mr. Yang, the Hong Kong government recently announced the news of the new land king on Queen's Road in Central. The total area of ​​this land is 2.58 square feet, and the plot ratio given by the Hong Kong government is 12;

The purpose of the auction is to raise funds to buy water, so it will be held on the 8th of next month, which is the Lantern Festival.”

"Speed ​​is of the essence. Time is very tight." Yang Wendong nodded and said, "The plot ratio is 12, which means we can build a 30 square foot office building. Not bad."

30 feet, or about 3 square meters. In the past, an office building of this size would probably not be big enough even in a third-tier city.

But Hong Kong in this era is no longer small. After all, the average building in this era is only a little over 20 stories high, and the average floor area is more than 1000 square meters. This single-floor area is relatively normal for low-rise buildings.

The taller the building, the larger the single-floor area will be. This is a building safety requirement.

Zheng Zhijie nodded and said, "Yes, the Hong Kong government is obviously very sincere this time, just want to sell it at a good price. Now many real estate giants in Hong Kong have signed up, including British companies such as Jardine Matheson and Wheelock."

"As expected, although these British companies don't develop real estate, they just like to gather in the middle of the city." Yang Wendong didn't care: "How many Chinese companies have participated?"

Zheng Zhijie said: "A total of 13 Chinese real estate companies have signed up for this auction, but in addition to the King of Land, there will be other plots of land, so it is not clear which Chinese companies will bid for the King of Land.

However, Hang Seng Bank is also involved. It is said that they want to build a new headquarters here, and their target is this piece of land.”

"It seems that Hang Seng Bank has been doing good business recently." Yang Wendong smiled and said, "I remember their new headquarters was only two years old? They are going to change again."

Zheng Zhijie replied: "Hang Seng Bank's business has indeed been booming in the past year. In the early years, Hang Seng had always cooperated with many Chinese factories in Hong Kong. Even though many factories had no money in the early days, Ho Sin Hang still took the risk to support them.

Hong Kong's industry is growing explosively now, and Hang Seng is making money without any effort behind them. Moreover, the commercial loans of factories have no collateral and the interest rates are high, generally around 10 percentage points."

"Well, the banks that followed the industrial development basically made huge profits." Yang Wendong nodded and said.

In the 60s, the real estate industry in Hong Kong was not small, but it was not necessarily larger than the industry. Especially now with the existence of Cheung Hing Industries, it has cultivated many high-quality suppliers and their suppliers.

HSBC, Hang Seng Bank and even Liu Chongxing in previous years all achieved rapid development by supporting Hong Kong's industries; however, banks such as Standard Chartered, Bank of East Asia and Bank of Communications missed this opportunity.

Of course, the impact of the rise of industry on banks is only one of the factors, and there are other factors. However, bankers who were able to see the future development of industry in the early years generally had good vision in other aspects.

A combination of factors led to the rise of Hang Seng Bank, which even threatened the status of HSBC and Standard Chartered at one point, laying the groundwork for the bank run crisis two years later.

Zheng Zhijie took out another document and said, "Mr. Yang, these are the detailed introductions of the new land. There are also introductions to some of the surrounding commercial facilities. Please take a look."

"Well, OK." Yang Wendong took the document, read it carefully, and said, "Then sign up. The location of this land is not worse than that of the Four Seasons Hotel."

If it is ordinary land now, he actually has no great interest in it, because ordinary land will be available in large quantities by 66/67.

However, even though there might be people selling land or properties in prime locations in Central in 67, the number is still scarce. These places have long been controlled by old British giants, and the new Chinese elites are basically unable to obtain them.

In the original history, Chinese capital had already suppressed British capital in the 80s, but Central Building was still difficult to acquire. Even in the 21st century, about half of it was still in the hands of British capital.

Zheng Zhijie asked again: "Then what are we going to build when we bid for this piece of land? Will we keep it for ourselves, sell it, or half-keep it for ourselves?"

Yang Wendong asked in return: "Does the Hong Kong government have any restrictions?"

Zheng Zhijie replied: "No, but these must be stated in the bidding materials. There are no restrictions on this, and the Hong Kong government will not investigate.
But generally speaking, what is reported will be implemented in the short term, unless there are economic problems."

"Well, then we'll apply to build an office building and own the property ourselves." Yang Wendong nodded and said.

He would not sell the property in Central in advance just because the housing prices fell in 66. That would be stupid because he might not be able to buy it back, especially the ownership of the entire property.

Zheng Zhijie said, "Okay, there is one more thing. We at Changxing Real Estate have been cooperating with Hang Seng and Bank of East Asia. Now Hang Seng is also competing for the same piece of land, which is considered a conflict. So, will we only look for Bank of East Asia for financing this time?"

"At least 20 million." Yang Wendong thought for a moment and said, "We can talk to HSBC. They helped me a lot in shipping before, so this time it's like returning the favor. If it's appropriate, we can give them the money, or part of it."

From the perspective of Yang Wendong, a time traveler, there is little risk in purchasing supertankers on a large scale. But from the perspective of HSBC, even if Sanders is optimistic about the shipping market, there is still a great risk in providing him with an unsecured loan.

Although the interest rate is high, it is still a great help to me. It will be beneficial to both parties to cooperate more with HSBC in other loans.

"Okay." Zheng Zhijie said, "Then I'll go back and prepare the information."

"Well," Yang Wendong said again, "Old Zheng, remember, starting from this year, our real estate company will start to shrink in the real estate sector, except for a few special investments;

From 58 to now, Hong Kong real estate has increased by nearly 3 times on average. I think the current real estate bubble is a bit too big. "

Zheng Zhijie thought for a moment and asked, "What about residential properties?"

Yang Wendong said: "We will continue to build residential buildings this year, but we will still focus on high-end development. We will discuss the next step next year."

One benefit of the residential business is that you can get your funds back in advance and eliminate the risk; but knowing that there is a real estate crisis, doing so feels a bit like cheating ordinary people.

Therefore, Changxing’s residential business has always focused on high-end markets. These people have strong risk resistance, and the houses they buy are generally not their life savings.

"Okay." Zheng Zhijie agreed.

He understood that Changxing Real Estate would gradually shrink.

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(End of this chapter)