What’s next for Hong Kong developers in mainland China?

Hong Kong's top property developers are pivoting their investments in mainland China from residential to commercial properties - including hospitality - as weak sales and fewer attractive opportunities shift their focus to existing assets, recurring income, and debt reduction. Wharf Holdings' Stephen Ng noted the lack of good opportunities on the mainland after recycling capital from previous projects.

The shift mirrors a broader change in how Hong Kong developers approach assets in China, once an important growth market. Mainland China's contribution to property sales revenue for Hong Kong's major developers has plummeted, falling to just 2% at CK Asset Holdings and 4% at Henderson Land, down from 52% and 25% a year earlier. All four major developers have halted residential land acquisitions through public tenders since 2023, and their existing mainland land holdings have shrunk.

The retreat began after the property debt crisis erupted in China in 2021. While they still hold residential projects in stronger-tier cities, Hong Kong developers show no plans to acquire new residential projects in the near to medium-term. Most are focusing on commercial properties, shopping malls, hotels, and mixed-use developments for stable rental and operating income.

Hong Kong's advantage in luxury retail properties, due to high-quality assets and established tenant networks, remains relevant. Hang Lung Properties recently opened a mixed-use development in Wuxi with a hotel, shopping center, offices, and flats. Hongkong Land is developing a $8 billion mixed-use project in Shanghai. Developers are also managing capital differently, selling commercial properties, reducing debt, and exploring ways to release capital from completed assets.