SOLO W.S. Cheung, who joined Sun Hung Kai Properties (China) Co Ltd last December as regional deputy general manager for its East China operation, has spent the past 19 years of his career on the Chinese mainland with the majority of them in Shanghai, a city where the Hong Kong-native first came in 1993 as the first general manager of CY Leung & Co's Shanghai branch, or DTZ, a global real estate advisor, as it is currently named.

Prior to his latest appointment with SHKP, Cheung had also worked with Orient Overseas Developments Ltd for more than 10 years, in charge of its marketing and sales department and also general manager for its Tianjin branch after the company extended its presence to the northern city.

Boasting a career spanning nearly two decades in Chinese mainland cities including Shanghai, Hangzhou, Nanjing, Suzhou, Kunshan and Tianjin, Cheung could almost be considered a veteran in the industry as well as an "old hand" in the domestic real estate market, with extensive experience in planning, development, sales and management of retail, office as well as residential projects.

Shanghai Daily interviewed Cheung in his office in Central Plaza, a SHKP property on Middle Huaihai Road overlooking the hustle and bustle of Xintiandi.

During the exclusive one-hour interview, Cheung shared some of SHKP's latest developments in the city, as well as his views on how different it is to operate business in Hong Kong and Shanghai, how he expects the country's rein-in measures to affect the company's operation here and whether there are bubbles in the country's real estate market.

Q: As one of Hong Kong's largest real estate companies which has gone public since 1972, Sun Hung Kai Properties Limited has built its reputation over the decades as a developer specializing in premium-quality residential and commercial projects. We've learnt that as early as the fourth quarter of this year, The Wei Fong project, a long-anticipated high-end residential project in Pudong, will be released to the local market. Would you like to give a brief introduction of this project?

A: Wei Fong, which boasts a breathtaking view of the Huangpu River, is actually SHKP's first major landmark luxury housing project in Shanghai. With a total gross floor area of more than 150,000 square meters, it involves several phases of development. As we've planned, the first phase - about 200 deluxe apartments with a total GFA space of around 50,000 square meters - should get ready for presale around the end of this year if everything goes smoothly. Typical units range from 140 to 170 and between 200 and 300 square meters. Many of them will have stunning views of the core section of the historical Bund.



Q: What about its price range and who will be your major customers?

A: In fact, the future price range of this project hasn't been settled yet because pricing, as we know, is not only based on the cost but more importantly, should be highly related to market at the time. One thing for sure at the moment is that it is definitely among the city's top-tier apartment projects and one of the most costly in downtown Shanghai. As for customers, we expect the majority of our buyers will be Chinese mainlanders, not only from Shanghai but from all around the country as well. Of course, there will also be some overseas buyers due to Shanghai's established role of a global financial center.



Q: Shanghai has implemented a strict home-purchase ban since February that prohibits local families who already own two or more houses and families without residence cards who have one home in the city from buying any more units. How do you expect that policy to affect the sales of this project?

A: While such austerity measures by the government will surely have some impact on the residential sales market as some potential buyers will be disqualified, we would like to view things from a more dynamic perspective as new groups of buyers who are qualified and financially capable for purchase as well will also keep emerging at the same time.



Q: By introducing a batch of tightening measures since late January, the central government has been launching a fight against housing speculation over the past months in a hope to prevent asset price bubbles. From your personal point of view, are there any bubbles in the city's housing industry?

A: Frankly speaking, I believe economists are in a better position to make such a judgement. But for me, there's perhaps a simple way to tell whether there are bubbles in an industry or not. As long as people with the least knowledge of an industry flock to make quick money out of it, that might be a signal of bubbles. From my personal point of view, the city's housing market is still pretty healthy so far and I can see no bubbles in this industry at the moment. The stronger purchasing power of Chinese mainland people, the local industry watchdog's strict regulations guiding commodity housing presale, as well as raised down payments for mortgage loans at commercial banks, will all help cut risks of bubbles and guarantee a stable development of the industry.



Q: As a veteran developer with operations in both Hong Kong and the Chinese mainland, what are the major differences you've perceived in the two markets in terms of luxury home development? And what are the major challenges you've encountered here?

A: The most notable difference between the two markets is that Chinese mainland buyers are extremely keen on the space of a house whereas for Hong Kong buyers, they are comparatively less focused on the total GFA space of a unit. For mainland buyers, they need not only large bedrooms, living and dining rooms, they want their kitchens and bathrooms to be spacious as well to make a high-quality living experience. However, for most Hong Kong buyers, even buyers of luxury units, they tend to be much more accustomed to rather "compact" apartments probably due to the fact that Hong Kong has always been a city where land resources are extremely limited. However, in recent years, some Hong Kong developers have also started to build more large units so as to cater for a growing home-purchase demand from Chinese mainland buyers.

As for challenges, since the Chinese mainland real estate market is still yet to be a market with complete freedom, we're more prone to policy changes from the central government and in terms of capital operation, we also need to take a more prudent approach here to ensure a smooth and safe operation.



Q: Housing prices in Shanghai are already among the most expensive on the Chinese mainland. However, compared to Hong Kong, there is still quite some gap at the moment. How do you expect property prices in the two markets to grow over the coming years and do you think the gap will be broaden or narrowed?

A: In terms of high-end housing, the current gap between the two markets is actually pretty large with top-tier projects in Shanghai asking for more than 10,000 yuan (US$1,538) per square foot on average whereas in Hong Kong, luxury houses usually cost between HK$30,000 and 40,000 (US$3,855 to US$5,141) per square foot. While both markets will continue to register price growth in the future, I believe luxury homes in Hong Kong will climb at a faster pace whereas in Shanghai, a comparatively mild growth should be expected mainly due to differences in both supply and economic development. Meanwhile, for the rest of the housing market, we've all noticed that the price gap has been narrowed very quickly over the past decade with those in Hong Kong now priced a little more than double than their equivalents in the city. This trend will probably continue in the coming years as those in Shanghai keep catching up.



Q: Who are your major competitors here and compared to them, where does your strength lie and what are your weak points?

A: For SHKP, as well as many other overseas developers doing business here, I always believe that Chinese mainland counterparts will remain our main rivals. In general, they are much more aggressive in their business expansion, more bold in decision making and usually have much lower management costs. Most of them adopt a more flexible way to do business compared to overseas developers, who, after learning a lot of lessons from the industry's cyclical ups and downs in other developed markets, are extremely cautious and keen on risk controls even though at a cost of losing opportunities. Compared to most of our domestic counterparts, we are more experienced players with notable strength in product design, construction quality management as well as service offered to customers.



Q: Besides the Wei Fong project, could you name a few other developments that will launch in the near future?

A: We are scheduled to launch a luxury villa development in neighboring Suzhou, Jiangsu Province, almost around the same time as Wei Fong and after that, we will focus on the development of two mixed-use projects in Suzhou and Nanjing, both called ICC. They will probably hit the market in a couple of years.

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