00:00we're seeing a bit more price discovery at least in the hong kong property market and we're starting
00:03to see the market kind of sense that in some ways that there might be some recovery underway
00:08do you think that we've we found a bit of a bottom it feels like we found a bit of a bottom
00:13definitely if you look at our retail sales numbers they've been coming back the second
00:17half last year was strong fourth quarter was especially strong we broke records in terms of
00:22occupancy foot traffic and retail sales so it does feel like it's coming back hong kong a little bit
00:28weaker we're still finding the bottom there i think we found it but the we'll have to see how
00:34the retail numbers come out these next couple of months so overall mainland china definitely giving
00:40us cause for some hope that being said i think the numbers are strong but we're still a little bit
00:45careful on the outward outlook what assumptions you're making on mainland retail leasing specifically
00:52along the luxury space of course you mentioned that's a bright spot for you guys so for january
00:56so far has been uh a little bit uh down basically flat from last january okay the bright spot is that
01:03january last year was chinese new year uh this year chinese new year is in february so uh we're hoping
01:09that that means uh good retail sales uplift and we think that it's tracking it looks like you're
01:15you've been quite active in expanding your your china retail leasing portfolio right cities like shanghai
01:20hangzhou wuxi how do you compete with some of these domestic big names and big developers and
01:26landlords like china resources land for example in this market so the way i describe ourselves is
01:31we're a small a small and beautiful um and you know so we have to do things in a slightly different
01:36way uh definitely we don't have the scale um everything from finance costs and access to capital
01:41is different uh so we have to really try to stand out in terms of doing things as high quality
01:46as niche and as um as high-end as possible and that's what we continue to do and what we've
01:52announced recently is our v3 which is uh starting an asset light uh path and this is definitely going
01:57to make better use of our capital especially when that's constrained we're working on reducing our
02:02gearing and the question is how do you expand while reducing your gearing and that's uh basically with
02:08asset light so that's what we've been doing and only in the cities where we have the strongest
02:12presence and the best performance already so that's where we're working to expand
02:17how does that so what does it mean as far as the business model is concerned so you mentioned
02:20asset light so try to explain that to a five-year-old for example yeah so if i go back um our last
02:27version version two was really asset heavy where we'd buy a plot of land we'd develop it and then
02:32we'd lease it um so this is really where we're leasing the plot of land or leasing an existing mall
02:36and operating it so uh if you look at china retail uh real estate prices yeah you know they feel like
02:42they've uh topped out um it's it's hard to see a lot of upside in the near to medium term uh and
02:48therefore it's you know so we used to want to capture that capital upside yeah and now we're more
02:52about capturing capturing the operational upside uh so so increasing our operational exposure uh without
02:59uh having too much capital exposure you mentioned hong kong's recovery might be a bit not i mean maybe not
03:05as solid right now as mainland and what you're seeing um at what point are you going to start
03:10looking at maybe opportunities then i mean are you looking to sell more properties or even acquire
03:15any new projects in hong kong this year so in hong kong we've really been uh working hard to sell
03:19uh last year we actually sold a lot we contracted a lot of sales but we're not going to recognize a lot
03:24of it until this year so last year was actually a good year for sales um but that'll be recognized this
03:29year uh we're looking to sell down uh more we still have some properties for sale mostly on the high
03:34end but we have some uh remaining in aperture uh so that's that's what we're looking to do obviously
03:39if good opportunities come by i think we're happy to buy as well uh we we do feel like the markets have
03:44bottomed or at least uh we found the bottom on this round what do you think is driving this recovery
03:49so in hong kong yeah in hong kong there's a lot of mainland uh uh new hong kong uh people coming in
03:56the talent scheme has definitely brought in and brought up uh rental levels and as these people
04:01have rented now for a couple of years they may be looking to buy these tend to be slightly higher
04:05end buyers so i'm more bullish on the top end of the market than i am on the mass i think the mass
04:12has seen sort of a structural re-rating over the past couple of years it'll be some time before
04:16that comes back whereas i think the high end is definitely more cyclical and therefore more resilient
04:21for us i mean it's really been noticeable uh the the pickup in tourists visitor flow let's just call
04:29it uh tourists and businesses and we've had a lot of mega events we're moving into march where
04:35traditionally it's a mega event month right you have everything from art basal all the way to the
04:39seventh tangibly is that starting to show up as far as you talked about foot traffic but what about
04:44leases and retail sales for example is that starting to pick up too we're we're really happy that foot
04:51traffic is picked up okay we're not as happy at the retail sales they haven't picked up the same
04:56at the same pace that uh traffic has okay it's so it's usually lagging a lagging indicator but um we're
05:01gonna have to work harder to transmit those uh foot traffic into sales and you know right now i the the
05:08the appeal of shenzhen is still strong and hong kong people even though it sounds like they're going
05:12up a little bit less um it's still difficult to compete on price um yeah you're you were still able
05:19to maintain your occupancy rate during these turbulent times right 90 percent offices yeah
05:24yeah of your office portfolio despite the headwinds the revenue was still kind of edging lower i mean
05:29because of falling rents of course do you think that that's the next place to follow in terms of
05:35this recovery now that we've seen at least when it comes to the housing market is is recovering that
05:39maybe rental is going to be the next thing to watch i would really like for office rents to rise this
05:44year that's what's really i like how you started that answer already that was really what dragged
05:49our um numbers last year because offices have been tough both in hong kong and in the mainland
05:54um it actually took away some of the gains that we made in uh retail so retail's done well offices
06:00not so much i don't see the end in sight for offices just yet um of course here in hong kong we're
06:05talking about the ipos and the financial services industries helping with that occupancy but there's
06:11still a lot of occupancy especially here in central and so i think occupancy has to come up before
06:15prices are going to come up and i don't yet see the end to that and the strategy to maintain the sort
06:21of 90 occupancy rate is that do you think that's going to be down to price supply seems to be an
06:26issue i think is what you're mentioning too yeah so i think there's still going to be a little bit
06:30of price pressure because occupancies haven't fully uh caught up yet uh in the mainland of china it's
06:35also tough um uh offices i think it's you know i've had this discussion with a lot of my friends
06:41and peers is it cyclical or is it structural and when you're having that discussion it's not a good
06:45discussion to have that means that things are bad um and so i don't yet see the end uh for office
06:50rentals in china yet what is the answer to that though yeah is it cyclical or more structure my answer
06:55is actually that it's more cyclical um and i think that if the economy comes back when it comes back
07:00office rents will come back um you know there's still that dynamism uh and if they can reignite
07:05that uh then i think that offices can uh come back at least at the high end of the market you know that
07:12you mentioned just now you know the ipo markets come back that's actually come up quite quite a bit
07:17in our show as people talk about how a lot of these firms listing here will need office space
07:21brokerages are expanding their their headcount and hence hopefully office space how has that
07:26translated not so much on demand itself but just conversations that you had
07:30uh with your peers it's definitely helpful um but for the time being i think i'm having more
07:36conversations uh than signing so many deals exactly
Comments