Victor Li Tzar-kuoi’s CK Asset Holdings is downsizing its Shanghai team by 30 percent, according to reports in the mainland press, which indicate that the Hong Kong-based developer stopped renewing contracts with local employees since February of this year.
The reports of layoffs come after the real estate firm has sold off mainland assets worth more than $9.42 billion over the past five years, and renews talk of CK Asset, which Hong Kong billionaire Li Ka-shing built into one of Asia’s largest property groups, taking an increasingly skeptical view of the prospects for mainland real estate.
A spokesman for CK refuted the reports of a reduction in its mainland team on August 24th, according to a story on Hong Kong website HK01, but accounts citing numerous sources give credence to a shrinking CK team north of the SAR border.
Reduction in Force Plan Being Implemented
According to a report by mainland business website Cailian, CK Asset issued layoff notices and compensation plans to staff around Chinese New Year in February of this year. The number of layoffs was not clear but the reductions in force are said to affect the company’s investment, marketing, and engineering departments.
A person with knowledge of CK Asset’s Shanghai operation did not deny the layoff accounts in an interview with Shanghai-based site the Paper, but described the reduction from the company’s current headcount of 300 people in the city as inevitable given its shrinking number projects in Shanghai.
CK Asset’s interim report published on August 2nd, highlights the company’s growing focus on the European and Australian real estate markets, stating that the company has potential acquisitions under discussion in those markets, including a large scale project in Australia.
CK Keeps Shedding Mainland Properties
Shanghai once ranked among CK Asset’s major investment destinations, however, reports indicate that the Hong Kong developer hasn’t acquired new sites in Mainland China since May 2012 and now has only three projects in mainland China’s most prosperous city, all of which are now completed or scheduled to complete this year.
According to the company’s interim report, CK Asset remaining projects in Shanghai include the 1.6 million square foot (151,786 square metre) Hupan Mingdi residential development in Jiading District, the 6.7 million square foot Upper West Shanghai commercial complex in Putuo District and the 726,757 square foot City Link commercial project Jing in An District.
While staying away from mainland site acquisitions over the past five years, CK Asset has reportedly sold properties valued at a total of over HK$73.8 billion in the mainland market during the period from 2013 to 2018.
In February 2014, Li Ka-shing sold the Nanjing International Financial Center for RMB 2.58 billion ($380 million), and four months later let go of the International Capital Plaza office building in Shanghai’s Hongkou District for RMB 1.54 billion.
In 2015, CK Asset sold off the Century Link commercial complex in Shanghai Pudong district to an ARA Asset Management fund backed by insurer China Life for RMB 20 billion, and then in January of this year, CK Asset was reported to be selling its stake in a partly completed residential and commercial project in the western Chinese city of Chongqing for RMB 20 billion.
Li Family Looks to London for Bargains
At the same time that the Li family has been reducing CK Asset’s exposure in the Greater China market, the developer has been expanding its property investment portfolio in the United Kingdom, continental Europe and Australia.
The Hong Kong real estate giant’s sole land acquisition in the first half of this year, was of the 5 Broadgate office complex for GBP1 billion. The company is also reported to be exploring several potential acquisitions in Australia.
CK Asset reported a 20 percent increase in core profit for the first half of 2018, mainly thanks to the world-record breaking sale of the Center in Hong Kong’s Central for HK$40.2 billion, which was completed in May.