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Sun Hung Kai Properties is the leading property developer in Hong Kong. While others may specialize in certain sectors—for example, CK Asset in mass residential and Swire Properties in office—SHKP is a significant player in all sectors of the city’s property market. Its sheer scale and dominance translate into a formidable competitive advantage in a highly consolidated Hong Kong property market.

Sun Hung Kai Properties is one of the city’s largest holders of retail and office properties and the underlying economic growth positions the company’s investment property assets to generate solid rental growth. SHKP's established assets are in well-located areas under single-landlord management, and they will remain attractive investment for wholesale property investors, supporting asset values. The stock of Hong Kong's prime office space is far below that of similar financial centers. Infrastructure investments by the Hong Kong government will further integrate the city with its neighbors across the Pearl River Delta and encourage the growth of new towns in the city’s outlying areas. The company’s portfolio of regional mall assets is well placed to serve an increasing suburban population, as well as a day-trip tourists from across the border.

Sun Hung Kai Properties has a competitive advantage in sourcing land supplies in Hong Kong. First, as a result of the company’s long operating history, it is a major owner of industrial and agriculture assets suitable for conversion. Second, the city's land market is dominated by a group of major developers with significant power to dictate the amount of supplies coming into the market. While the city's property market is hampered by uncertainties posed by social protests and pandemic, the company has maintained its steady direction by continuing to invest in Hong Kong.

In China, the company established itself as the purveyor of high-end commercial developments and a premium residential builder. However, its operations do not benefit from a durable competitive advantage.

Opportunities:

• The company’s well-located office and retail portfolios in Hong Kong are expected to continue to perform well in years to come, underpinned by steady growth in tenant demand and ongoing supply side constraints.
• Backed by a strong balance sheet and a low-cost land bank, the company can weather any potential slowdowns in Hong Kong's residential market.
• The company’s China operation is expected to become a significant earnings contributor in a few ears. Investors will then begin to realize the value of the high-growth China business.