Money Matters | Mainland developers are ‘money mills’ that rely on spiralling asset prices
To understand why HNA Group paid such an insane price for Kai Tak land, we need to take a closer look at its business model
In late December Money Matters wagered HK$100 that HNA Group would win its third piece of land in Kai Tak. Now, I owe you.
The bet erred in its assessment of the risk appetite of mainland corporations, not for over estimating, but under estimating. Their game is far more aggressive than expected.
In what was the final land auction of 2016, the Kai Tak site was snapped up by rival K Wah International Holdings, the developer controlled by casino tycoon Lui Che-woo.
First, let’s recap my thinking ahead of the New Year holiday. The argument was if HNA pledged its two overly priced land plots in Kai Tak for loans, it would bid for the next one at a high price to prevent its house of cards from collapsing.
