MIPIM Asia: Hang Lung, the Hong Kong-listed real estate firm, is planning to expand aggressively in reaction to the slowdown in the Chinese market.
Speaking in a keynote interview today at MIPIM Asia in Hong Kong, the company’s chairman, Ronnie Chan, said that now was the optimum time for increasing Hang Lung’s portfolio. The firm is one of the most successful retail owners in China with 13 malls.
“Why would we buy when the market is strong? We will absolutely go out and expand now. When no-one else is buying, give me a call,” he said. “It is a great time to expand when the market is bad. It is bad for weak property companies but good for strong players.”
Managing the impact of the market on the current portfolio is difficult, Chan said, adding that landlords had to be flexible with their tenants.
“It is limited with what you can do. Keep good relationships with your tenants and don’t gouge that last penny out of people. People appreciate good tenants and that creates good long-term relationships,” he said.
The trend to develop giant malls in China was not a concept that Chan supported and would not be part of the company’s expansion plans. He was also against the trend of centres becoming leisure focused.
“A total of 1.2m to 1.7m sq ft is more than enough. How many brands can you find in the world to fill that space? We don’t have anchor tenants. The way we manage centres we don’t need them.
“Some malls have 70% restaurants. That means they are not paying any money. We are about 17%. If you go to 30% in a small centre, who is paying the rent?”
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