HONG KONG -- Hong Kong-based developer New World Development will refocus on primary cities in China, moving away from second- and third-tier ones, its chairman says.
The developer, whose portfolio spans residential, hotel and office-retail projects in Hong Kong and 17 Chinese cities, will invest in large-scale integrated landmark projects in primary mainland cities.
Tightening measures were rolled out to tame runaway prices of homes and land sites that were seen in regional hubs like Wuhan and Zhengzhou in central China in late December, as well as large metropolises like Shanghai. However, inventories still piled up in some lower-tier cities.
"Having different policies for different cities, rather than a one-size-fit-all policy, is the right direction," said New World's Chairman Henry Cheng Kar-shun, a billionaire who controls Chow Tai Fook Jewellery Group and transport companies.
On whether the group would accelerate mainland investment due to the weaker yuan, Cheng said that would depend on the pace of depreciation. Prolonged currency depreciation will increase the cost for long-term investors like New World. "You'll need a balance point for the currency to stabilize," he said, speaking before the company's shareholders' meeting on Thursday.
The group is facing intense competition in Hong Kong as mainland developers hasten their shopping spree. In late December, Chinese tourism conglomerate HNA Group won its second residential site in Kai Tak, the former home of Hong Kong's airport, just a month after its first attempt.
The deal, at a record $5.4 billion Hong Kong dollars ($696 million), or HK$13,600 per square foot, surpassed bids by 20 developers including New World, Wheelock, Sun Hung Kai Properties, and Cheung Kong Property Holdings controlled by Hong Kong's richest man Li Ka-shing.
Commenting on HNA's record-setting deals, Cheng said, "I don't get it." He said the group had a "cautious" strategy in land acquisition that would depend on demand and the economy. Despite the impact of new cooling measures and a steeper U.S. interest rate cycle on home buyers, he expects the domestic market to stabilize in 2017.
There are also political headwinds for the group as the election for Hong Kong's next leader looms near. In 2012, Cheng initially supported former Chief Secretary Henry Tang Ying-yen but abruptly switched to Leung Chun-ying, who emerged the eventual winner.
In late March, Hong Kong's chief executive will be handpicked by a 1,200-strong election committee largely dominated by pro-Beijing loyalists and businessmen. Cheng and members of his family-controlled businesses are estimated to have secured eight votes in the committee.
Asked about his preference for potential candidates, who include two high-ranking officials, a retired judge and a lawmaker, Cheng was careful of his words. "I don't second-guess anything."