Lan Kwai Fong Holdings Ltd., the biggest landlord in the restaurant and bar area in Hong Kong’s business district, plans to complete one project in China annually over the next five years.
The group is close to agreeing to help build and invest in an entertainment district comprising offices, theater, and retail shops in Shanghai with an area of about 6 million square feet, Chairman Allan Zeman said. Lan Kwai Fong is currently co-developing a 1.2 billion yuan ($196 million) retail and restaurant project in the eastern Chinese city of Wuxi with the local government.
Lan Kwai Fong is seeking to benefit from an increase in appetite for high-end restaurants and bars among China’s expanding middle-class amid a drive by the government to boost domestic consumption. The Wuxi project, scheduled for completion in 2015, is the company’s third in the country, where per capita disposable income for urban household doubled in the past six years.
“The younger generation in China are like every other young generation in other places,” Zeman said in an interview in Wuxi, about 30 minutes away by train from Shanghai, yesterday. “They spend. They earn. They’re real consumers.”
Lan Kwai Fong is the developer of Hong Kong’s iconic stretch of bars and restaurants in the Central business district. The area has more than 100 restaurants and bars, not all controlled by the company. Zeman started its Hong Kong project in the 1980s with a restaurant that served hamburgers. The stretch is now an after-work hangout for bankers, lawyers and executives.
The group is also negotiating with the governments of Changsha and Qingdao, Zeman said. Investment in some of the projects can be as much as 15 billion yuan, he said, declining to elaborate.
DreamWorks Animation SKG Inc., maker of the “Madagascar” films, and China Media Capital are partners of its Shanghai project, said Zeman, 64, whom in 2008 gave up his Canadian passport to become a naturalized Chinese citizen.
The Wuxi project, which the group will have a 75 percent ownership, has gross floor area of 168,300 square meters (1.81 million square feet), according to the company. Lan Kwai Fong also has a completed project in Chengdu and one on the southern island province of Hainan scheduled for completion next year.
The group is setting up one or two funds from investors in Hong Kong and China to finance its developments, instead of taking the company public, Zeman said.
“Rather than doing an IPO now, it would make a lot more sense to” wait until its projects in China start bringing in profits, Zeman said.
A two-year redevelopment plan for the California Tower in Hong Kong, which includes adding a 28-story building with terraces on every floor for smokers, who are banned from lighting up indoors, is scheduled to be completed by the first quarter of 2014, Zeman said.
In 1975, Zeman founded a sourcing company to export clothing to Canada, according to the Hong Kong General Chamber of Commerce website. The company, Colby International, was in 2000 bought by Li & Fung Ltd., now the largest supplier of toys, clothing and other consumer goods to retailers including Wal-Mart Stores Inc.