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Real Estate

Li Ka-shing's CK Asset remains reluctant to travel Belt and Road

Lack of official treaties, stricter bank regulations seen making investments risky

CK Asset Holdings is selling a 73-story tower in Hong Kong to C.H.M.T. Peaceful Development Asia Property for HK$40.2 billion ($5.15 billion).

HONG KONG -- China's Belt and Road Initiative may be the next gold mine for international trade, but Hong Kong property mogul Li Ka-shing appears in no hurry to jump into the game.

While the business world hails Chinese President Xi Jinping's ambitious trade and infrastructure plan spanning over 60 countries, the chief at Li's property company CK Asset Holdings said the less-developed nations along the ancient Silk Road are not the right places to invest -- at least not for now.

"For Belt and Road countries, many of them are developing countries, and relevant treaties and regulations are not in place yet. I suggest to private investors that we need to move forward with caution," Justin Chiu Kwok-hung, executive director at CK Asset Holdings, previously known as Cheung Kong Property, said here Tuesday at the MIPIM Asia Summit, a gathering of real estate professionals.

"Trade treaties between the governments are very important," he said, warning that private investments "would be very risky" without them.

"For Cheung Kong, until these treaties are in place, we would continue to invest in developed economies like Singapore and Malaysia," Chiu said, which offer businesses more mature legal and financial systems.

The less-developed countries along the Belt and Road's route are largely missing on the map of Li's business interests, which extend over 50 nations. The property mogul has yet to show any intention to tap such countries despite saying in a recent public address that Hong Kong businesses are set to benefit from trade plan.

Chiu also cited the challenge of raising money in these less-developed territories, as international banks tighten regulations on capital flows.

"The major problem facing Belt and Road exercises would be the flow of [capital]," Chiu said. Banks now face greater pressure to enact more stringent compliance measures, he said, such as "know your customer" protocols requiring the businesses to identify and verify their clients. Stronger compliance would hinder financing activities in countries with less political and economic stability.

"The case is very different from the situation in China 30 years ago," he said, where raising capital was not a issue at that time even though the nation was underdeveloped. "Until all these problems are solved, the flow of capital to new countries, especially in Asia, would be very difficult."

Chiu also considers it too early for his company to jump into the property sector in these countries.

"Unless the local economies develop to a certain degree, the property market won't take off," he said. "There is no point for us to build five-star hotels because there is no demand."

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