A Q&A With 91-Year-Old Retiring Billionaire Lee Shau Kee
(Bloomberg) -- As Henderson Land Development Co.’s Lee Shau Kee steps down and hands the baton to his sons, here are a few of the 91-year-old billionaire’s views. Bloomberg asked Lee about property in real estate crazed Hong Kong, young people in the city today and his charity work.
On Hong Kong’s property market
Bloomberg: UBS Group AG said recently that Hong Kong property prices may rise for another decade. Do you agree with this view? What are your views on the outlook of Hong Kong property market? Will the Greater Bay Area be a big driver?
Lee: Hong Kong is a blessed haven. We have the support of mainland China, which is a very strong geographical advantage that is beneficial for property development. I am relatively positive about Hong Kong’s property prices. After all, “wealth comes with land.” The current market still enjoys substantial housing demand, mainly because the interest rate is quite low, and also because Chinese people like to have their own properties. Therefore, investments tend to gear toward properties. But we shall not neglect the risks too. The market is always subject to external economic factors. Buying home for one’s own use is not a problem. The most important thing is that they cut their coat according to their cloth.
Bloomberg: How vulnerable is Hong Kong to a major property crash, given the lack of affordability and rising debt levels?
Lee: If the property market in Hong Kong were to collapse, then it would definitely be a huge blow to the local economy, because the relevant industries have contributed to a significant part of our GDP. Last year, the Hong Kong Monetary Authority said around 65% of the homeowners have paid their mortgages in full, not to mention the fact that local banks are all very conservative in their home mortgage policies, with some properties getting only a maximum of 50% mortgage.
Overall, those who choose to buy their properties do not usually have affordability problems. Moreover, the HKMA has always been vigilant against these risks and closely monitors the situation. When there is a need, there will be measures to rectify the situation. Therefore the current risk should not be high.
Demand for housing is huge is Hong Kong but it is not easy to buy a property here. In view of this, I have donated some land and properties that are to be redeveloped, to provide youth hostels and transitional housing projects. I hope this will alleviate housing problems that the city is facing right now, and to offer the much-needed accommodation to the families in need.
In the long run, we support the government’s housing policy to allocate more land to build homes. Developing the New Territories and renewal of older districts are options worth considering too.
Many people may know that I have always been supportive of urban renewal because renovating older properties is beneficial to the society. Not only does it bring a face lift to the community, it can also help deter illegal building works, and to prevent hazards that arise from the deterioration of buildings. Some of the buildings we redeveloped were built over 50 years ago, some even had structural problems and created safety issues in the community. Therefore, urban renewal benefits both the government and the people.
Bloomberg: What are your views on the current government’s land supply policy, for example, allocating more land to public housing and building artificial islands?
Lee: Increasing land supply is the ultimate solution to our housing problems. Each solution has its own pace, and timing is also a consideration. Doing it quickly is better than doing it slowly because the government could speed up its land supply. The government has the responsibility to take care of those unable to afford a home. Public housing is a safety net that ensures a stable and prosperous society. There should be a balance between private and public housing, and the government should be attentive toward the very strong demand for private housing. Developing land in the New Territories requires infrastructure including transportation and drainage system. It needs the government’s support and the process won’t be easy.
On young people in Hong Kong
Bloomberg: Do you have any advice to young people in Hong Kong who are worried about their financial future and are not able to afford an apartment?
Lee: I am always of the view that young people need our support. My advice for them would be:
- It is important to work hard and not to be afraid of hardship. As the saying goes, "if you can endure hardship, you will be the best of men"
- It is advisable for men not to choose a wrong profession, while the women need to be wise in choosing their husbands
- If you are not financially secure, it is best not to get married too soon
- One must work hard to get one’s first capital, and from then on learn how to generate more money with the capital
There is no linear relationship between getting rich and buying your property. Do not let a property limit your dream. One must know how to manage their finances well, and to be prudent in spending. That way, you can accumulate wealth.
Bloomberg: Henderson Land donated a site for Hong Kong’s biggest youth hostel and last year offered a site in Sham Shui Po for container homes for needy families. Would the company consider more similar projects going forward? If yes, what would they be?
Lee: Other than modular housing in Sham Shui Po, I have also done various projects to relieve housing demand, including donating land to build elderly care homes and youth hostels. We have refurbished old buildings that are pending redevelopment for transitional housing. These projects share the same principle, which is to maximize the use of existing land resources.
In 2013, I donated a piece of land in Yuen Long to the government for an elderly care home. I wish this would alleviate the lack of supply of places in elderly homes. As the elderly in need of care move to these homes, the public housing units they formerly occupied will be vacated, thus letting other families take up the space.
In 2015, I donated land to build youth hostels, so as to allow young people to secure affordable accommodation. That way, they can save money more easily for career development or home ownership. When they have the ability to move out, other people can get the same opportunity.
Whether it is modular housing or social housing, transitional housing shares the same objective, which is to offer support to those households who live in partitioned homes or homes in poor living conditions, and to help those who are still waiting for an allocation of public housing units.
Be it modular housing or refurbishment of old buildings, we are simply making use of sites or buildings that are pending redevelopment. I think that these projects can be effective in helping to maximize the potential of land resources, and to alleviate the housing demand for people in need. In this sense, it is worth doing. We have various projects pending urban redevelopment, and will continue to identify those that can be adapted for transitional housing.
On Hong Kong’s future
Bloomberg: What’s your take on Hong Kong’s future? Is Hong Kong’s competitiveness at risk given the rise of mainland cities? How should Hong Kong position itself going forward?
Lee: I have confidence in Hong Kong. Some time ago I said there are four factors for a good governance of Hong Kong: Economic development, improvement of livelihood, narrowing the wealth gap and creating social harmony. Hong Kong still enjoys a good business environment. The tax system is simple and the tax rate is attractive,” he said. “The comprehensive legal system and the cluster of talents enable Hong Kong to maintain its status as an international financial center. But I think Hong Kong must keep abreast and attract talents to maintain its competitiveness. We should not simply consider mainland cities our competitors. We can in fact cooperate with them because Hong Kong will be better if China develops well.
Bloomberg: At this point in time, what are your greatest fears or worries for Hong Kong’s future?
Lee: When I was young, I experienced the period of war and turmoil. Life was very hard back then, but I survived through the adversity and continued to build my career. Comparatively speaking, Hong Kong is already a paradise. I really have no fear nor worry.
Hong Kong is unique in many ways. The government has a surplus with good income that enables it to cater to the needs of the grassroots. Hong Kong is blessed for its excellent geographical location as an international hub for economics, finance and logistic. Like a Switzerland in Asia, Hong Kong’s future will get better and better, thanks to our own edge and fortune. It is something we should all cherish.
Bloomberg: What’s the company’s expansion plan in China? Does recent China’s economic slowdown worry you?
Lee: Hong Kong and China are equally important for Henderson Land. We will continue to seek growth and room for development in both Hong Kong and China. That is also why we need two chairmen to perform their own duties.
On your legacy
Bloomberg: What would you have done differently if you had your time again? Personally and for your business.
Lee: If I could go back to the old days, I would go back to the days with Mr. Kwok Tak Seng and Mr. Fung King Hey when we -- the “three musketeer” -- worked together for business. At that time, we were able to divide up jobs among ourselves based on our strengths and we were happily associated as both teachers and friends. When we encountered problems, we would have a good discussion before coming up with a solution and shared our responsibilities accordingly.
Mr. Kwok was the most hardworking person I know. He would go to the construction site to monitor almost every day. Mr. Fung was a well connected man with extensive knowledge most suitable for the financial world. My expertise is in property sale, and I am able to judge the potential of the sites for project development. I gained not only a great sense of business achievement from working with them, but also a deep friendship that I have treasured my whole life. It was truly a regret our partnership did not last long for various reasons.
In the days after, I fought a lonely battle. I always told my sons they were lucky because they could discuss and give each other advice. Two heads are better than one. They have a much easier life than I did when building up Henderson Land.
Bloomberg: What are the different responsibilities and focus of your two sons as (to-be) joint chairmen of the company?
Lee: They have different personalities. Peter is flexible and Martin is practical. They have all along a good division of responsibilities. Peter mainly takes care of our China business and Martin takes care of the Hong Kong business. They have very good communication in all important matters and make joint decisions. For years I have stayed behind the scene and let them run the show. They have done very well with full marks. I am confident to pass them the baton.
Bloomberg: How would you conclude your life as a businessman in a few words?
Lee: I have been lucky my whole life. I am grateful for the universe that offers me opportunities to develop my businesses. I do not have any expertise apart from working hard. Because the universe has treated me well, I felt that I must pay back to the society in return.
I think simply knowing how to make money should not be considered a success. It is equally important to know how to spend it well. And the best way to spend money is on charity.
Ancient Chinese saints advocated one to“be good as water and to carry the outer world with a breadth of character.” I hope I will get there one day.
Bloomberg: What are you planning to do after you step down as chairman? Are you planning to focus on your foundation or charity work? Will you continue to donate HK$1 billion annually whenever Hang Seng Index hits 30,000 points? Why did you make such a pledge in your biography?
Lee: I will step down as chairman but remain as a director. I will let my two sons -- Peter and Martin -- to handle the daily operation. I will still participate and offer my opinion in major matters. Aside from work, I hope I will have more time to enjoy family life, play with my grand kids and continue with my charity work.
I have 11 grand kids, including six boys and five girls aged between 3 and 30. They all honor me and love me so much. I enjoy spending more time with them -- they make me feel young again. Sometimes they have little sense of family hierarchy and play tricks on me. I find it quite enjoyable since no one in my office would dare to play with me like that. I also hope that they could soon form their own families and have babies so I could have my grand-grand kids. I will be able to give out red packets again.
I once said that I would practice the money philosophy of Tao Zhugong, a Chinese ancient saint who advocated efficient spending. It is to be successful in generating wealth but also to be successful in spending it. Therefore, I look for charity projects that yield the highest returns in order to benefit the most number of people.
I believe in giving back to the society. Recycling and channeling the capital to good use will boost the economy and enhance livelihood. My philosophy in charity is the same as that of business: using a sprat to catch a herring. Through leveraging, a dollar invested could become 10 dollars, and that is how I define success. I would not waste money in places where they do not have good returns just for the sake of doing charity.
Our principle in charity is to benefit as many people as possible. Take the “Warmth Project Million Farmers Training Program” as an example, we provided vocational training to over 1 million farmers and 10,000 village doctors. That also benefited their families. I still find it worthwhile even after having donated over HK$400 million on this project already.
I am most interested in education and medical-related charity works, where I spend more time and efforts. Besides, Hong Kong, like other international cities, has relatively big wealth disparity. It is incumbent for the government, with the support of the community including the business sector, to do more to fight poverty. And everyone who has the ability should contribute too.
To alleviate poverty, I think we should start with education because it is the most important factor for social upward mobility. Most of my billions of donations went to education, which included 10 local universities in Hong Kong, Peking University, Tsinghua University, Fudan University and other foreign universities. In addition, I set up the Hong Kong Pei Hua Education Foundation 37 years ago for talent nurturing.
Charity should not be a one-off act. It should be persistent with no time nor money limit. We have been diligently seeking for the right projects that can benefit as many people as possible.
The instruction I gave to my sons was “make more, donate more.” While running the business well is essential, they must also continue my charity work in order to give back to the society.
--With assistance from Shawna Kwan.
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