A century-old wealthy family that rose from Shanghai

It’s Spring Again (1974).

That day, Chen Wenjie came to the chairman's office and said, "Dad, Chinese Estates Holdings wants to sell the Chinese Building on Queen's Road Central. That building has reached the point where it needs to be rebuilt, but Chinese Estates Holdings may not have the resources to rebuild it, so they want to sell it."

Chen Guangliang looked up and immediately became interested. He didn't really care about ordinary properties, but this office building site located in the core business district of Central was really tempting to him.

The Chinese Building is a famous building.

So, why is the Chinese Association called "Chinese Association"?
In the early days of Hong Kong's opening to foreign trade, a system of "separate governance for Chinese and foreigners" was implemented, with Victoria Harbour and Central being the territory of foreigners.

In British colonial Hong Kong, in Central, the heart of the city controlled by foreign firms, it was a source of pride for Chinese companies to be able to rent office space there.

In 1922, the former sites of the Hong Kong General Post Office and the Hong Kong Court were auctioned off. The Chinese in British Hong Kong seized this once-in-a-lifetime opportunity and bought the land for HK$50 per square foot. In 1924, the first building in Central invested by Chinese was built on this land.

However, the Westerners considered themselves superior and disdained to live in the same building as the Chinese. As a result, the building only had Chinese tenants and was named "Chinese House". In the following half-century, countless Chinese people made their fortunes from Chinese House, and the first stock exchange founded by Chinese, the Far East Stock Exchange, was also born here.

“Let’s hand this property over to Ping An Investment. Ping An Bank’s headquarters building on Garden Road is becoming increasingly outdated and is expected to need rebuilding in the 1980s; while China Bank can buy it and invest in its reconstruction, at which time it can temporarily serve as the headquarters of Ping An Financial Group.”

Chen Wenjie nodded. He didn't care about it. After all, the four brothers wouldn't hold a grudge over such a trivial matter. He said, "Okay, then Wensheng and I will go and talk to him."

Chen Guangliang nodded and continued, "This time, Cheung Kong Group has more opportunities to buy land in Hong Kong at rock-bottom prices. I think the period from 1974 to 1976 can be considered bottom-fishing. The reason is simple: the impact of this major stock market crash and oil crisis is more severe than before, and the real estate recovery is relatively slow. So you should be careful when buying land and not rush into it."

"Yes, I understand. We also need to invest overseas, while maintaining a certain proportion in the domestic market. If we consider this wave of real estate buying at the bottom to be from 1974 to 1976, then the five-year cycle will probably end around the early 80s."

That's really the case. Chen Guangliang said directly, "Let's calculate it like this for now, but who can say for sure? Our advantage lies in our increasing ability to withstand risks."

"Ok"

In the springtime Central district, the air was still heavy with the shadows of the stock market crash and the oil crisis—shops along the street were plastered with "Closing Down Sale" notices, and many companies in office buildings were cutting back on spending. Only the slightly old-fashioned "Chinese Building" on Queen's Road Central still exuded a unique sense of solemnity.

This iconic building, which carries the commercial memories of Hong Kong's Chinese community, is quietly hosting an important negotiation concerning its future.

When Ping An Investment President Chen Wensheng entered the conference room of Chinese Estates Holdings with two subordinates, Li Fushu and Feng Bingfen were already waiting there. As the core leaders of Chinese Estates Holdings (the Li family is the founder of Bank of East Asia, and the Feng family owns the Feng Group; the two families are deeply bound together through marriage), the two, although veterans in the business world, dared not neglect this young man who was only 32 years old. Chen Wensheng is not only one of the four sons of the Chen family, but also holds the decision-making power of Ping An Investment. The Chen family behind Ping An Investment is already a "top influence" in Hong Kong's Chinese capital circle. The four sons each run their own territory and have great influence in real estate, finance, shipping, industry and other fields.

"Mr. Chen is young and promising. He has taken charge of such a large-scale investment group at such a young age. He is truly a force to be reckoned with." Li Fushu was the first to stand up and exchange pleasantries, his tone polite.

Feng Bingfen also chimed in with a smile: "We have all witnessed the development of the Chen family in recent years. It is an honor for Chinese Estates to be able to cooperate with Ping An Investment."

Chen Wensheng nodded slightly, without much formality, and sat down directly before getting straight to the point: "Thank you for your kind words, Mr. Li and Mr. Feng. We came here today to discuss the matter of the Chinese Bank. We understand that the Chinese Bank urgently needs to be rebuilt, and Ping An Bank plans to rebuild its headquarters building in the future. Before that, it needs a property in the core area of ​​Central as a temporary headquarters. The location and historical heritage of the Chinese Bank are very suitable for our needs."

He deliberately clarified the purpose of the "temporary headquarters," which not only demonstrated his sincerity in the acquisition but also implied that the Chen family was not "taking advantage of the situation"—after all, with the Chen family's strength, they could have easily negotiated a lower price, but they chose to be honest about their needs and showed the other party sufficient respect.

Upon hearing this, Li Fushu secretly breathed a sigh of relief.

The reason Chinese Estates is selling Chinese House is not because they are facing financial difficulties, but because they are unable to rebuild it. In addition, they want to use the proceeds from the sale of Chinese House to acquire another company, China Entertainment, which owns the Entertainment Building in Central.

The Entertainment Building itself is worth less than half the value of the Chinese Building; more importantly, Chinese Estates Holdings needs to hold a 50% stake in China Entertainment to control the Entertainment Building.

The Chinese Building holds extraordinary significance for the Hong Kong Chinese community, and they are unwilling to sell this "spiritual landmark" at a low price.

Seeing Chen Wensheng's candid attitude, Li Fushu also put aside his concerns and responded frankly: "The Chinese Building has indeed reached a stage where it must be rebuilt, but the market is currently sluggish, and we simply cannot afford to support it. Ping An Investment's willingness to take over will not only allow this building to realize its greater value, but also put our minds at ease. In terms of price, the Chinese Building is located in the heart of Central, occupying approximately 1.8 square feet. At its peak in 1972, the land price in Central reached HK$1.2 per square foot. Even though the market is not good now, its scarcity is undeniable, and its resilience to price drops far exceeds that of ordinary properties."

These words both explained the value of Chinese Travel and laid the groundwork for the price quote.

Li Fushu paused for a moment, then stated his target price: "We hope the transaction price can reach HK$1.6 million."

Upon hearing this, Chen Wensheng did not immediately refute, but instead picked up the property information on the table and slowly said, "What Mr. Li said is true. The history and location of Chinatown are indeed worth this price. However, we have to consider the current market environment—the peak land price in 1972 is long gone. Now, the vacancy rate of office buildings in Central is rising, rents have fallen by 30% year-on-year, and redevelopment will require an investment of at least HK$1.5 million. After we acquire it, we will not only have to bear the acquisition cost, but also invest heavily in redevelopment, making it difficult to make a profit in the short term."

He put down the documents and gave his offer: "HK$1.5 million. This price, based on the land area, is about HK$8333 per square foot, which is about 70% of the peak price. It takes into account the current market downturn and respects the historical value of Chinatown. For us, this is a reasonable investment cost; for Chinatown, it can also recover a considerable amount of funds during the market downturn and alleviate cash flow pressure."

Feng Bingfen, who was standing nearby, couldn't help but interject: "Mr. Chen, 1.5 million is indeed too low. How about this, 1.6 million? We will immediately cooperate to complete all the procedures and promise to clear out the tenants within 3 months after the transfer of ownership, so as not to delay Ping An Investment's reconstruction plan."

He knew that the Chen family was not short of money and valued efficiency, so their initiative to propose a "quick handover" was both a concession and an attempt to facilitate the deal.

After a moment's thought, Chen Wensheng made his decision. He knew that although HK$1.6 million was HK$1000 million higher than expected, this premium was negligible compared to the long-term value of China Bank.

Moreover, a quick handover would allow Ping An Bank to move in as soon as possible, saving them the trouble of subsequent negotiations with the tenant. He immediately nodded: "Okay, let's settle on HK$1.6 million. I hope both parties can finalize the contract details as soon as possible and strive to complete the transfer within a month."

Li Fushu and Feng Bingfen exchanged a glance, both seeing relief in each other's eyes. Although the price hadn't reached its peak, it far exceeded their expectations during the market downturn. More importantly, they were reassured that the Chinese Building had been handed over to the Chen family—the Chen family not only had the ability to "revitalize" the building, but also understood how to respect its historical significance.

After the negotiations were finalized, both parties quickly entered the contract drafting and review stage. The entire process went exceptionally smoothly, without the typical "tug-of-war" that often occurs in business negotiations.

In early 1974, the Hong Kong stock market experienced a brief technical rebound, but the gains were limited. After January 21, influenced by a series of unfavorable factors such as high oil prices and the rise of the British Labour Party to power, the Hang Seng Index repeatedly declined from 592.86 points, constantly testing the bottom.

By early April, the Hang Seng Index had fallen to 420 points.

In response to the current predicament of the stock market, both domestically and internationally, and its inability to recover, the stock market commentary column of the *Oriental Daily* stated: Due to soaring oil prices, the prices of all necessities have continued to rise, and the volatility in the financial markets further demonstrates that inflation has not yet stopped. With the devaluation of currency, the value of stocks is naturally lower than in 1972. Even if the Ping An Index were to recover to over 600 points in real terms, it would still be less than the 300-plus points it was back then (not to mention that the index is currently below 500 points).

In the real estate sector, Ping An Investment's purchase of the Chinatown Building for HK$1.6 million attracted some attention in the market, but soon everyone was overwhelmed by fear.

At that time, among the Chinese-owned real estate companies in Hong Kong, Hang Lung had completely missed the opportunity to buy at the bottom because it had spent HK$1.8 million to purchase two properties from Times Film Company at its peak, and the properties were not delivered until the end of last year (1973). In other words, it was short of funds. Of course, the more this was the case, the more cautious Chen Zengxi would be.

Hopewell Properties suffered a major blow to its reputation due to the fake stock scandal, and shareholders vented their anger on the company. As a result, the company was unable to raise funds from the market to develop real estate, and all aspects of its operations came to a standstill.

New World Development, by focusing its efforts on the 'New World Centre' commercial project, will inevitably have significantly reduced its ability to acquire land at bargain prices.

Kwok Tak-seng of Sun Hung Kai Properties understood the principle of "turning goods around," and having made considerable profits from issuing many new shares at the peak, he was now buying up real estate at the bottom of the market, using the "turning goods around" approach to develop his business.

After Li Shau-kee spun off his business, he only had a small listed company with limited growth potential.

As for Li Ka-shing's Victoria Harbour Properties, its scale is pitifully small. While it may have the ability to exchange some high-quality assets by issuing new shares, it is no longer comparable to what it was in the past.

“Mr. Chan, Swire Properties is looking to sell the Sai Wai Lake site in Mid-Levels, North Point. The site is located in a famous scenic area and covers approximately 86.4 square feet. The price is very reasonable, only HK$8500 million.” Lu Xiaoqing, head of Cheung Kong Property Holdings, reported to Chan Man-kit in his office.

When the boss was also present, he addressed him as "Mr. Chen" and "Little Mr. Chen".

Chen Wenjie immediately said, "Okay. We've partnered with CIBC to develop Yidong Finance Company, so let Yidong acquire this land."

Lu Xiaoqing said suspiciously, "This land is of high quality. We only need to use about one-tenth of the land to build high-end residences, and the rest can be used to build a leisure and entertainment venue. Once the real estate market recovers, this land will generate considerable profits."

The implication is that giving up this territory is too cheap for the Canadian Imperial Bank of Commerce.

Chen Wenjie said with a smile, "Brother Xiaoqing, we need to think long-term. Cheung Kong Group will eventually go global. If we have a capable partner in Canada, then this place that Chinese people like to immigrate to may become an important investment area for us in the future. So this land is not only an investment by Yidong Company, but Yidong Company will also continue to buy land at bargain prices."

Lu Xiaoqing suddenly realized and said, "Okay, I understand what you mean. Yidong Finance Company is a joint venture with both parties contributing HKD 5000 million each, totaling HKD 1 million. Purchasing this site only requires HKD 8500 million, and we can continue to buy several smaller sites. Later, by using loans and selling pre-sale apartments, we will definitely make a fortune."

Chen Wenjie nodded and said, "Overall, this year is a bit more difficult, but the situation will definitely improve next year. Cheung Kong Group also needs to start buying up land at rock-bottom prices. This time, we need to pay attention to the New Territories, since there is very little land left in the city."

"Yes, I know"

After Lu Xiaoqing left, Chen Wenjie muttered to himself, "The bottom-fishing has begun."

He couldn't help but sigh, realizing that the Chen family's enduring prosperity was truly due to his father, their "brain trust." He hoped his father would live to be over 100 years old, still able to guide him on the right path.

He also understood that his father was in such good health that there was absolutely no problem, so he only needed to be a 'prudent manager'.

The reason Swire Properties is selling the Sai Si Lake site at this time is to raise funds to focus its resources on developing 'Swire Shipyard,' which will become Taikoo City.

Faced with Cheung Kong Holdings' purchase intention, they readily agreed to sign the contract. After all, at that time in Hong Kong, there weren't many companies that could afford to buy land worth HK$8500 million.

They don't think they'll lose money, because they plan to continue selling some non-core land and focus on developing the Taikoo Shing project. The Taikoo Shing project alone will require an investment of over 10 billion, but of course, it's a long-term investment, and the 10 billion doesn't need to be put up all at once.

The 8500 million from the sale of the Saixi Lake site is enough to cover part of the initial funding for Taikoo City. (End of Chapter)