Real estate mogul Lee Shau-kee dies, marking end of an era in Hong Kong development

The founder of Henderson Land Development Group, Lee Shau-kee, who led real estate development in Hong Kong and became Asia's richest person in the 1990s, has passed away at the age of 97. Lee Shau-kee was a figure who grew alongside the trend of urbanization in Hong Kong that began after World War II. In addition, during the heyday of the Hong Kong financial market, he earned the nickname 'Asia's Warren Buffett' through stock investments. Coincidentally, after he stepped away from active management, Hong Kong began its period of stagnation. Local media noted that the death of Lee Shau-kee marks the end of an era in Hong Kong development.

According to the Chinese Hong Kong News on the 18th, Henderson Land Development Group stated, 'On the evening of the 17th, our founder Lee Shau-kee passed away peacefully surrounded by family at the age of 97.' The group did not mention the specific location of Lee Shau-kee's death or the cause. Henderson Land Development Group has businesses ranging from real estate development to hotels, department stores, and natural gas distribution, and the South China Morning Post (SCMP) stated, 'The total market value of the business empire built by Lee Shau-kee reached 551 billion Hong Kong dollars (approximately 102.3 trillion won) as of the 17th.' His personal assets are currently valued at $29.5 billion (approximately 42.6 trillion won), and he had risen to become Asia's richest person and the world's fourth richest person, according to Forbes in the 1990s.

Immediately after the news of Lee Shau-kee's death broke, the Hong Kong media Dim Sum Daily said, 'The death of Lee Shau-kee symbolizes more than just the loss of a business mogul; it marks the end of an era in Hong Kong development.' Indeed, Lee Shau-kee's life is closely tied to the history of Hong Kong's development. Born in 1928 in the Shunde District of Foshan City in Guangdong Province, China, he moved to Hong Kong at the age of 20 when the repercussions of World War II still lingered. His family was involved in the precious metals and foreign exchange trading business on the mainland, and Lee Shau-kee also started in the same field in Hong Kong.

With the money he earned, Lee Shau-kee entered the real estate construction industry at the age of 29. His insight came from the observation that a relatively stable economic environment compared to the mainland led many mainlanders to migrate to Hong Kong, resulting in a severe shortage of housing supply. Lee Shau-kee stated in his biography, 'Every family needs a roof over their heads,' adding that 'Housing provides people with the most solid security.' One of the seven individuals who partnered with Lee Shau-kee in his first real estate venture in 1958 was the late Kwok Tak-seng (deceased in 1990), founder of Sun Hung Kai Group. Starting in the 1990s, they rose alongside the Li Ka-shing family from Cheung Kong Group and the Cheng family from Shinsegae Development to form one of Hong Kong's four major families, marking the beginning of that era.

Lee Shau-kee and his partners changed the landscape of the Hong Kong real estate market. They were the first to introduce the 'tiered sales and 10-year partitioning payment' method. Until then, real estate investment in Hong Kong was only possible on a building-by-building basis, but this opened the door for small investors to participate in the market. In 1963, Lee Shau-kee and Kwok Tak-seng founded Sun Hung Kai Group independently. When real estate prices in Hong Kong plummeted due to the Cultural Revolution on the mainland in 1967, they initiated mass purchases, sparking a real estate boom in Hong Kong. Even after establishing Henderson Land independently in 1976, they took a different path. While major real estate developers focused on luxurious property developments in central Hong Kong, Lee Shau-kee began developing inexpensive agricultural land in the outskirts adjacent to the mainland. One of the areas created through this development is the Sha Tin New Town, one of Hong Kong's largest residential areas.

The atmosphere in Hong Kong, which had grown dependent on real estate, underwent a reversal when it was handed back to China in 1997. The New York Times (NYT) stated, 'Since the end of British rule and the return to China, Hong Kong has lost some of its atmosphere as a free business center,' noting that 'as the number of companies establishing offices in Hong Kong decreased, the local real estate market stagnated.' This context explains why the Hong Kong current affairs weekly Far Eastern Economic Review assessed that Lee Shau-kee, the real estate tycoon, 'struggled to adapt to a new generation and a new business environment.' However, Lee Shau-kee soon found a new source of income in finance. Entering stock investments in the 2000s, he accumulated a personal stock portfolio valued at 200 billion Hong Kong dollars (approximately 37.2 trillion won) by 2008. This was when he earned the nicknames 'Warren Buffett of Hong Kong' and 'God of Stocks.'

In 2019, Lee Shau-kee appointed his two sons, Lee Ka-shing and Lee Ka-chung, as co-chairpersons and stepped down from active management. Following this, the upward trend in Hong Kong's real estate and financial markets began to falter. At the end of last year, The Economist reported, 'Hong Kong has long been a symbol of exorbitant real estate prices, but now it is experiencing severe stagnation,' adding that 'housing prices have dropped by more than a quarter since the end of 2021, and the number of unsold homes has reached its highest level in 20 years.' According to global real estate firm Savills, office rental prices in Hong Kong fell by 40% from their peak in 2019 last year. The Chinese government, feeling threatened by the Hong Kong pro-democracy movement, has deprived Hong Kong of its freedoms and strengthened control, shaking its status as a global financial center. In 2023, capital raised by private equity and venture capital in Hong Kong amounted to $10.2 billion (approximately 14.8 trillion won), a decrease of 81% compared to 2021 ($53.3 billion).

Dim Sum Daily stated, 'Lee Shau-kee's death occurred amidst Hong Kong facing unprecedented difficulties,' adding that 'the fragility of the real estate market, which has long been a pillar of the Hong Kong economy, is evident from Shinsegae Development experiencing a recent loss of 6.6 billion Hong Kong dollars.' As major growth engines lost strength, Hong Kong's gross domestic product (GDP) grew by only 2.5% last year compared to the previous year, a slowdown from the previous year's 3.3% growth.