Hongkong Land Holdings Limited History

8th Floor
One Exchange Square Central
Hong Kong

Telephone: (852) 2842 8428
Fax: (852) 2845 9226

Public Company
Incorporated: 1889 as The Hongkong Land Investment and Agency Company Ltd.
Employees: 700
Sales: $213.00 million (2001)
Stock Exchanges: London Singapore
Ticker Symbol: HKLD
NAIC: 233110 Land Subdivision & Land Development; 531110 Lessors of Residential Buildings; 531120 Lessors of Nonresidential Buildings; 531311 Residential Property Managers; 531312 Nonresidential Property Managers

Company Perspectives:

The company's mission is to invest in, develop and manage property and infrastructure assets in Asia that build sustainable streams of value for our shareholders.

Key Dates:

Catchik Paul Chater, a bank clerk in Hong Kong, forms his own brokerage firm.
Chater buys and leases his first piece of Hong Kong property.
Chater founds the Hong Kong and Kowloon Wharf and Godown Company to develop the Kowloon coastline.
Chater merges his company with wharves owned by British trading company Jardine Matheson.
Chater pursues and wins a 57-acre reclamation project in the central district of Hong Kong.
The Hongkong Land Investment and Agency Company Ltd. is formed and makes its first issue of shares; Chater and James Johnstone Keswick--head of Jardine Matheson--are joint directors.
Hongkong Land holds 13 important properties in Hong Kong's central business district, worth a total of HK$11.34 million.
Hongkong Land begins developing low-cost residential homes in Hong Kong.
The Hongkong Land Investment and Agency Company is renamed "The Hongkong Land Company."
In an effort to hedge against depressed property prices, Hongkong Land diversifies, buying stakes in Hong Kong Telephone and Hongkong Electric.
Hongkong Land undergoes reorganization, selling its noncore holdings; the company changes its place of incorporation to Bermuda.
The company's residential properties are sold off.
Jardine Matheson establishes Jardine Strategic Holdings, which becomes Hongkong Land's primary shareholder.
Hongkong Land completes its first development in Vietnam.
The company starts its first two developments in The Philippines.
The company starts its first development in Singapore.
Hongkong Land starts development in Thailand.

Company History:

Hongkong Land Holdings Limited is one of Hong Kong's foremost property investment, development, and management companies. Through its three operating companies, Hongkong Land owns and manages approximately five million square feet of office and retail space in Hong Kong's central business district, as well as three commercial developments in Singapore, two in Vietnam, and one in Thailand. The company also develops and manages residential properties, albeit on a smaller scale, in HongKong, The Philippines, and Mainland China. The company's primary shareholder is the Jardine Matheson Group, a British conglomerate.

Late 1800s: Hongkong Land's First Taipan

The company's origins date back to 1864 when Catchik Paul Chater, a native of Calcutta, arrived in Hong Kong to become a clerk with the Bank of Hindustan. After two years with the Indian bank, Chater formed his own brokerage firm with backing from the wealthy Sassoon family of Iraq, then active in Hong Kong for more than three generations. By 1870 Chater's early trading success put him on the road to becoming one of Hong Kong's great taipans, or illustrious merchants, who made their fortunes in trading opium and tea, or simply land.

In 1870 Chater bought and leased his first piece of property to the Victoria Club on Hong Kong Island. Over the next ten years, he developed a number of sites on the island's core central business district.

Today, the district's warren of skyscrapers, tightly packed from harbor front to the foot of the hill sloping down from Hong Kong Island's Peak district, is packed with shoppers and workers. This bustle owes much to Paul Chater's early efforts to develop the area to such an extent that he would later be described as "one of the most powerful and beneficent figures in the Empire."

During the 1870s Chater worked tirelessly to develop the Hong Kong harbor, providing new wharves for use by the colony's expanding trading and manufacturing businesses. He also did not neglect real estate opportunities in Kowloon, across the bay from Hong Kong Island. In 1884 Chater founded the Hong Kong and Kowloon Wharf and Godown Company to continue developing the Kowloon coastline. Two years later, in 1886, Chater arranged a merger of his new company with wharves held by Jardine Matheson, the British trading giant, in Kowloon.

Aside from aligning his own fortunes with those of a great trading company, Chater foresaw opportunities to develop commercial sites on Hong Kong Island itself, adjoining the harbor. Attempting this was difficult as Hong Kong Island had so little land at that time on which to build. To create space, Chater joined in various land reclamation projects, the results of which greatly changed Hong Kong's coastline. The cost of reclaiming land was high, but demand for space in Hong Kong was as acute in the 1880s as more than a century later.

Hong Kong property developers could foresee high land prices and handsome investment returns from land they reclaimed. Chater was not disappointed. In 1887, he began pursuing the 57-acre Praya Reclamation Project in the central district, on which stand many of Hong Kong Island's most prestigious buildings, including the Mandarin Oriental Hotel. To argue his case for reclamation, Chater bypassed the Hong Kong governor, Sir William Des Voeux, and traveled personally to London to conclude negotiations with the Colonial Office. The Hongkong Land Investment and Agency Company was incorporated in March 1889 to facilitate the Praya project.

To maintain his ties with Jardine Matheson, Chater lured James Johnstone Keswick, an early taipan with the trading company, to Hongkong Land. Chater and J.J. Keswick became permanent joint managing directors of the new company. Hongkong Land's first issue of shares in 1889 yielded a mere HK$250,000 in working capital. The fact that the issue was almost solely taken up by European investors provoked anger among many Chinese investors, who promptly established a rival real estate company. Chater and Keswick responded to this challenge by making a further share issue of 25,000 HK$100 shares, doubling Hongkong Land's working capital and providing for a reserve fund of HK$1.25 million.

The company's funds were soon used up, however, in getting work underway at the Praya Reclamation Project. In 1890, land worth HK$800,000 was purchased and mortgage loans of HK$1.3 million were made. Shareholders received a 7 percent dividend at year-end. At the annual general meeting in Hong Kong's city hall, shareholders protested against the low return for an allegedly expensive share issue a year earlier. To quell the criticism, Keswick once again justified his nickname, "James the Bloody-Polite," calming nerves in the audience and urging the shareholders to sit tight for future rewards from their real estate investment.

True to Keswick's word, the returns for Hongkong Land shareholders grew over the next decade. The annual dividend stood at 8 percent for much of the 1890s, rising to 10 percent in 1898 and 12 percent in 1899. Notable among Hongkong Land's early developments was the New Oriental building, completed in 1898 on the recently reclaimed land stretching from Des Voeux Road to the fashionable Connaught Road.

1900-65: A Growing Portfolio

Soon skyscrapers were added by Hongkong Land to the reclaimed site, earning Chater a knighthood in 1905. Between June 1904 and December 1905, the company built five tall buildings, each either five or six stories in size, which dwarfed the other buildings in the colony. Bolstered by the success of the Praya Reclamation Project, Chater completed the adjoining Praya East Reclamation Project in 1921, in time to profit from the establishment of the giant Hongkong Electric on the site. Before his death in 1926, Chater was the guiding light for Hongkong Land.

In the years before World War II, the company built up a property portfolio in the colony worth HK$11.34 million in 1941 and comprising 13 key properties in the central business district. The Japanese occupation of Hong Kong suspended operations at the company, which reclaimed its properties in September 1945, finding most in remarkably good structural condition.

After the war Hongkong Land sold off much of its noncore central portfolio, including badly damaged properties in the Peak district. It then set its sights on key developments in the business district itself.

The company's first large development project was the adding of three stories to Marina House, first completed in 1935. Then, in 1950, Hongkong Land completed a HK$7 million redevelopment of 11 and 13 Queen's Road Central, turning the complex into the nine-story Edinburgh House. The building of Jardine House was completed in 1958, following renovations to the earlier Jardine Building, purchased in 1955. In the same period, the company erected the 13-story Alexandra House on a triangular site formed by Des Voeux Road, Chater Road, and Ice House Road.

During this period, Hongkong Land was involved in work to establish much of the colony's skyscraper waterfront known worldwide. Also in 1958, Hongkong Land demolished the King's and York buildings, first erected in 1905, to make way for Swire House. The Queen's Building, once the crown in the company's portfolio, was torn down and replaced by the giant Mandarin Oriental Hotel, opened in 1963. The completion of the Prince's Building in 1965 brought to nine the number of major office and commercial blocks that the company then owned on Hong Kong's prestigious waterfront and in the central district.

1965-80: Name Change, Diversification

In 1965, Hongkong Land began developing low-cost residential homes for sale, especially in the colony's Kwun Tong and Shaukiwan districts. The company later made investments in southeast Asia, purchasing properties in Australia, Hawaii, Indonesia, Thailand, Singapore, and Malaysia. Returning to core commercial property, Hongkong Land completed in 1972 and 1975, respectively, The Excelsior Hotel and World Trade Centre developments, on land first purchased by Jardine Matheson in 1841.

In 1970, however, Hongkong Land gained world attention by paying a record price of HK$258 million for reclaimed land on Connaught Road, along Hong Kong's waterfront. Company Chairman Henry Keswick, a descendant of J.J. Keswick, made the bid before announcing plans for a 50-story development on the site, the Connaught Centre. The building was completed in 1973 and was renamed Jardine House in January 1989.

The construction of the Connaught Centre prompted a change of name from Hongkong Land Investment and Agency Company to The Hongkong Land Company. This change coincided with expansion for the group through the purchase of Humphrey's Estate and Finance in 1971, and the Dairy Farm Ice and Cold Storage Company a year later. Before 1986, when Hongkong Land sold the company, Dairy Farm grew to become the colony's largest department store chain, and Australia's third largest.

In 1973, Hongkong Land bought a 49 percent stake in the Oriental Hotel in Bangkok. This diversification was made against a backdrop of a slumping property market affected by a bearish Hong Kong stock market in 1973. A general tightening of credit in the economy as a whole, and controls imposed on commercial rents, encouraged Hongkong Land's strategy.

A year later, Mandarin International Hotels was established, to be followed by the building of the Manila Mandarin and the Jakarta Mandarin in the late 1970s. In 1987, Mandarin Oriental International Limited was demerged from Hongkong Land and given its own stock market listing on the Hong Kong stock exchange. With seven hotels in southeast Asia, and contracts to operate a number of Mandarin hotels in North America, the company remained a formidable force in the global hotel trade.

In 1976 Hongkong Land completed work on a 36-story development to join Alexandra House to Prince's Building, Swire House, the Mandarin Hotel, and the Connaught Centre, by a series of interlocking footbridges. This effort was soon supplanted by the Central Redevelopment, Hongkong Land's masterplan for redeveloping the colony's Core Central business district. This meant the demolition of five old buildings owned by the company--Gloucester Building, Windsor House, Lane Crawford House, and behind them Marina House and Edinburgh House--to make way for the Landmark. This giant complex entailed the building of two 47-story office blocks, Gloucester Tower and Edinburgh Tower, both to be surrounded by a five-story shopping development. Completed in two stages, in 1980 and 1983, the Landmark served as a focus for Hong Kong's business and shopping centers.

Late 20th Century: Recession, Heavy Debt, Reorganization

Despite the colony's property boom in 1980 and 1981, the effects of the world recession and high unemployment rates on domestic commerce and real estate prices depressed market conditions at the beginning of 1982. Property prices in Hong Kong plunged, and hesitation among investors, combined with generally weakened purchasing power, left the property market in a depressed state. Hongkong Land's reaction in 1982 was to diversify out of its traditional areas of property development and investment and to purchase large stakes in Hong Kong Telephone Company and Hongkong Electric Holdings.

It was the legacy of the early 1980s property boom, however, which led to the company's acquiring the last major site in Core Central, near the Connaught Centre, for HK$4.7 million in February 1982. Work began shortly after on Exchange Square, the colony's largest commercial development up to that time.

The heavy borrowing to finance the Exchange Square project helped lead Hongkong Land into financial difficulties when the colony's property market crashed in 1983. The slump in demand for large residential units and commercial office space produced a property recession in 1984. As a reaction, Hongkong Land underwent a major reorganization to reduce its substantial borrowing. In 1984 gearing--the amount of borrowing in relation to a company's equity or shareholder's funds--stood at an uncomfortably high 103 percent.

Hongkong Land sold most of its overseas properties and noncore investments, including its stakes in Hong Kong Telephone and Hongkong Electric. By the end of 1986, the company had brought gearing down to a manageable 31 percent without greatly reducing its presence in Core Central, the heart of its property portfolio.

Ambitious restructuring continued with the demerger of Dairy Farm in 1986 and Mandarin Oriental in 1987 from the company's core holdings. At the same time, Jardine Matheson set up Jardine Strategic Holdings, a public company, which became Hongkong Land's principal shareholder.

Hongkong Land's residential portfolio was sold off in 1986, as were Harcourt House and Windsor House a year later. As a result, company gearing fell to a mere 6 percent of shareholders' funds in 1987.

Tower Three of Hongkong Land's ambitious Exchange Square project was opened in 1988, following the earlier opening of Towers One and Two in 1985. This brought office rentals in the complex up to three times their 1985 level.

In 1989, Hongkong Land acquired Fu House, which stood between two other Hongkong Land buildings, the Bank of Canton Building and No. 9 Ice House Street. The three buildings were demolished to make way for the company's newest development of 500,000 square feet. Also in 1989, Hongkong Land Holdings Limited was incorporated in Bermuda, with The Hongkong Land Company becoming a wholly owned subsidiary.

Hongkong Land headed into the last decade of the century in financially sound condition, despite a persistent draining off of Hong Kong's personnel and resources due to fears of what might happen when ownership of the colony reverted back to China in 1997. Some analysts speculated that the company itself was prepared to sell its way out of Hong Kong. HongKong Land had already taken precautionary measures in view of the coming Chinese reclamation, moving its corporate home to Bermuda. In 1991, it looked to build an asset base outside Hong Kong, acquiring 25 percent of Trafalgar House PLC, a large British construction company. But real rumors about the company's exodus started in 1992, when HongKong Land sold one of its office towers in the colony's central business district. The sale of the tower--Nine Queen's Road--led many to speculate that it was only the beginning of a gradual sell-off.

The rumors proved untrue, however. HongKong Land remained firmly rooted in Hong Kong, despite tense relations between its largest shareholder, Jardine Matheson Group, and the Chinese government. It also, however, began making investments in other Asian countries. In 1995, the company finished its first development in Vietnam, a commercial building in Hanoi. In 1996, the company initiated two residential projects in the Philippines, a high-rise condo project in Manila and a joint venture formed to develop middle-income housing.

Further non-Hong Kong investments followed. In 1997, HongKong Land began construction of a commercial complex in Singapore, a seven-story office building with an adjoining mall. Then in 1998, HongKong Land completed its second Vietnamese development, also in Hanoi. In 2001, HongKong Land entered Thailand, partnering with a Thai property developer to refurbish and manage a retail center in Bangkok. That same year, the company partnered with two other development companies to build a second commercial development in Singapore.

Not all of HongKong Land's investments were successful. Its investment in Trafalgar House, particularly, proved to be a costly mistake. The company sustained loss after loss, and by the time HongKong Land sold its majority stake in 1996, it had lost more than $3 million.

In late 2000, HongKong Land offered to buy back up to 260 million of its shareholder-owned shares, a number that represented approximately 10 percent of the company's issued shares. Although the official reason given for the buyback program was a desire to increase the company's gearing and create a better capital structure, many industry watchers suggested that the real reason was to strengthen Jardine Matheson's control of the company. Maintaining control was of extreme importance to the group's controlling family, the Keswicks--descendants of J.J. Keswick, who had merged Jardine Matheson with Chater's fledgling company back in the late 1800s. The Keswicks had maintained rigid control of Jardine and its holdings--including HongKong Land--for more than a century through a complex and unusual cross-shareholding agreement, which also made the company virtually immune to takeover attempts.

Looking Ahead

As of early 2002, HongKong Land had a residential property development underway in Hong Kong, due for completion in 2004. The company also was developing a residential property in Beijing, as part of a joint venture with the Vantone Group, a mainland China investment company. As the new century unfolded, it appeared that HongKong Land had no surprises in store for industry watchers or investors. According to a June 13, 2001 South China Post interview with the executive director, Ian Hawksworth, the company planned to continue focusing on Hong Kong and Singapore as bases for commercial development. The company also was looking at Shanghai as a potential development target, according to the article.

Principal Subsidiaries: Hongkong Land China Holdings Limited; Hongkong Land Limited; HongKong Land International Holdings Limited; HongKong Land Infrastructure Holdings Limited; The Hongkong Land Company Ltd.; The Hongkong Land Property Company Ltd.; HKL (11 Chater Road) Limited; HKL (Esplanade) Pte Limited (Singapore); HKL (Prince's Building) Limited; Foundasia (HK) Limited; Mulberry Land Company Limited; Asia Container Terminals Limited (28.5%); Bonus Plus Company Limited (50%); King Kok Investment Limited (40%); Normelle Estates Ltd. (50%); Grosvenor Land Property Fund Limited (50%).

Principal Competitors: Hutchison Whampoa Ltd.; Kerry Properties Limited; New World Development Company Limited.

Further Reading:

  • Clifford, Mark, "The Taipan's Last Chance," Business Week (International Edition), April 26, 1999, http://www.businessweek.com/1999/99<-->17/b3626011.htm?scriptFramed.
  • Criswell, Colin, The Taipans of Hong Kong, Oxford: Oxford University Press, 1981.
  • Hongkong Land 1889-1989, Hong Kong: Hongkong Land, 1989.
  • Irvine, Steven, "An Obsession with Control," FinanceAsia, July/August 2000, p. 21.

    Source: International Directory of Company Histories, Vol. 47. St. James Press, 2002.