Fortune
In the mid-1990s, Percy Weatherall, who was then the CEO of Hongkong Land, extended a job offer to a young Michael Smith, a junior property cadet at Jones Lang Wootton. Smith declined the offer as he was already committed to a position with UBS in Sydney. Reflecting on this moment years later, Smith recalls, "Weatherall wasn't very happy. I don't think he had many people say no to him."
Fast forward three decades, and Smith occupies that very corner office as the newly appointed CEO of Hongkong Land. At his welcome dinner, he approached Weatherall to recount the story, only to discover that the former CEO had completely forgotten the encounter.
Hongkong Land's Legacy
Hongkong Land stands as one of the most prominent and historic developers in Hong Kong. Established in 1889, it serves as the largest commercial landlord in the Central district, owning 4.8 million square feet of prime office and retail space, including Exchange Square, which houses the stock exchange; Jardine House, known for its government-protected harbor views; and the Landmark retail complex.
However, under Smith's leadership, there is a concerted effort to sever the company's strong ties to Hong Kong—a significant move for an entity that carries the city's name.
"Hongkong Land has always been seen as a proxy for Hong Kong's office rents," Smith explains in an interview with Fortune at the company's Central headquarters. "Analyzing past office rental cycles and our share price reveals around 90% correlation; thus, every other aspect of our business seemingly held little significance to investors."
Smith's mandate, as assigned by Jardine Matheson—which holds just over 50% of Hongkong Land's shares—envisions transforming the landlord into a more diversified fund manager. This strategy includes attracting institutional co-investors to expand the company’s presence beyond Hong Kong to other gateway cities in Asia.
The Company's Origins and Evolution
Founded in 1889 by Catchick Paul Chater—a British businessman born in Calcutta with Armenian roots—and James Johnstone Keswick, the taipan of Jardine Matheson, Hongkong Land has deep historical roots. Just six days post-establishment, Chater secured the colonial government’s approval to reclaim 65 acres of waterfront land. Today, this land is home to notable structures such as Alexandra House and Prince's Building, along with the Jardines-owned Mandarin Oriental hotel.
Chater was instrumental in the establishment of several foundational businesses in Hong Kong, including the Hongkong Electric Company, Dairy Farm, and Wharf.
Currently, Hongkong Land is under the ownership of Jardine Matheson, one of the largest conglomerates in Hong Kong and positioned at No. 449 on the Fortune Global 500. The 1980s saw Jardines consolidating its control over Hongkong Land following an aggressive expansion phase that left the developer financially overstretched.
Recognizing the need for restructuring, Jardines appointed Smith—a seasoned investment banker with experience at UBS and Goldman Sachs, where he played a vital role in developing Asia's real estate investment trust landscape. Subsequently, he became the regional CEO for Europe and the United States at Mapletree Investments, Temasek's real estate arm based in Singapore.
Smith regards Singapore's real estate market as an exemplar of capital discipline, a quality he believes is often lacking among Hong Kong developers, including Hongkong Land.
"Hongkong Land was trading at an 80% discount to net asset value," he observes. "We possess incredible assets, clearly worth much more than 20 cents on the dollar, complemented by a reputable brand, yet we may not have been as progressive as some of our Singaporean counterparts."
Smith's Strategic Transformation
Within six months of his appointment, Smith laid out a plan to discontinue the residential build-to-sell business, divest from non-core assets, and limit the company’s exposure to any single market to below 40%.
"When I joined, we managed 50 to 60 projects across Asia—spanning locations such as China, Cebu in the Philippines, and Indonesia—yet we lacked market depth in any specific area," he recounts. In his assessment, residential development was a risk-laden endeavor. "We acquired land in Singapore just before the government raised the stamp duty from 30% to 60%. Such regulatory changes can devastate feasibility."
Earlier this year, Hongkong Land initiated the Singapore Central Private Real Estate Fund (SCPREF), which now manages 8.2 billion Singapore dollars (approximately $6.3 billion). This fund encompasses Hongkong Land's interests in significant properties, including Marina Bay Financial Centre Towers 1 and 2, One Raffles Quay, One Raffles Link, and Asia Square Tower 1, previously under the Qatar Investment Authority. The QIA opted not to liquidate its holdings directly but instead became a founding investor in the fund, joining forces with Dutch pension giant APG Asset Management and a Southeast Asian sovereign wealth fund, which Smith has opted not to disclose.
"It took many by surprise due to the scale and speed with which we assembled this fund, especially for first-time fund managers," Smith comments.
Hongkong Land is poised to achieve a target of $100 billion in assets under management by 2035, significantly increasing its current total. Smith has committed to ensuring the firm does not issue new equity or jeopardize its investment-grade status. "Should we reach net asset value or attain a premium—similar to what REITs experience—there might be an opportunity to raise equity then," he explains. "But when you are trading at a discount? That would not be prudent."
Hong Kong's Recovery and Diverging Markets
Hongkong Land's shares, which are traded in London and Singapore despite the company's name, have appreciated more than 55% in the past year, surpassing their previous all-time high in January.
In 2025, the company recorded a net profit of $1.3 billion, rebounding from a net loss of $1.4 billion in 2024, driven by an $890 million fair-value gain on property reevaluations. However, underlying profit—after excluding non-trading items—declined by 8% to $458 million.
Examining Hongkong Land's rental income reveals contrasting trends across its markets. Rental income from Hong Kong's offices and retail fell by a combined 7% from 2024 to 2025, while Singapore's office rents increased by 4%, and China’s retail sector saw a 27% growth. Notably, Hong Kong still contributes approximately 60% of the company's overall rental income.
The city continues to recover from the adverse impacts of prolonged COVID-zero policies, which effectively restricted international travel for several years. Many foreign firms, particularly from the U.S., have relocated their operations to alternative regional cities, notably Singapore. Moreover, China's economic challenges—including a struggling property market, regulatory scrutiny on major tech firms, and sluggish consumer spending—have cast shadows over Hong Kong's role as a vital economic conduit to the mainland.
Certain sectors remain stagnant even years after the pandemic; commercial real estate has undergone a protracted decline as businesses hesitated to expand amid China's economic deceleration. Retail has similarly faced difficulties: foreign tourist numbers have yet to rebound to pre-pandemic levels, mainland Chinese visitors are now seeking experiences rather than shopping, and many Hong Kong residents are purchasing across the border in Shenzhen.
Nonetheless, in spite of these challenges, Smith maintains a positive outlook for his Central properties while simultaneously working to decrease Hongkong Land's exposure to Hong Kong. "This represents the core of Hong Kong island. Whether targeted by high-net-worth individuals or CEOs, this remains the prevailing locus," he asserts.
Grade A Central rents climbed by 3.5% in the first two months of 2026, according to Jones Lang LaSalle. "We observed an inflection point in our portfolio about a year ago. The supply of super-prime office assets in the heart of Hong Kong had started to tighten, and vacancy rates were declining rapidly," Smith elaborates. "This year's performance has been remarkable."
There are signs that optimism may be extending to Hong Kong on a broader scale. The city's economy grew by 5.9% in the first quarter of 2026, marking its fastest growth rate in nearly five years. Retail sales surged by 12.8% year-on-year in March, with Deloitte projecting an annual increase of up to 8% in Hong Kong's retail market, potentially reaching around $52 billion.
One factor driving office demand is the city’s IPO market, which facilitated $37 billion in 119 new listings in 2025, leading global rankings; in the first quarter of 2026, 40 companies raised $14 billion—marking the strongest first quarter performance in five years.
Smith also perceives a wealth effect stimulating his retail portfolio. "What we’re witnessing now resembles a trickle-up effect from the capital markets," he remarks. "Numerous individuals are gaining wealth from IPOs, trading, and related activities, thus fostering increased confidence."
Remarkably, 85% of shoppers at the Landmark are "852 number holders," referring to Hong Kong's country code, indicating that the resurgence in luxury retail is predominantly driven by local wealth rather than tourist expenditure. With respect to high-net-worth individuals, Smith highlights that "after New York, Hong Kong ranks second."
A Bet on Downtowns
The success of Hongkong Land prompts scrutiny regarding whether the wider city is experiencing a "K-shaped economy," in which high-end consumers continue to spend while lower-income consumers face mounting challenges due to limited employment opportunities and rising expenses.
In response, Hongkong Land intends to focus on segments of the market that exhibit resilience, both in Hong Kong and across the region's other financial hubs.
Smith’s strategic vision is rooted in the belief that prime downtown real estate in Asia's major cities—offices preferred by corporations like JPMorgan and Goldman Sachs, alongside retail spaces sought after by luxury brands like Louis Vuitton and Hermès—will appreciate in value as businesses vie for talent and capital gravitates toward quality.
This perspective marks a departure from previous discussions regarding urban centers, which had shifted in the wake of the COVID-era transition to remote work, resulting in vacant streets and idle office spaces. Today, as companies incentivize employees with improved work environments while tightening flexible and hybrid schedules, there is a noticeable return to urban centers.
"It's not exclusively about Hong Kong," Smith observes. "Consider Manhattan: JPMorgan has just completed its headquarters in the heart of the city. Additionally, look at King's Cross in London."
Beyond Hong Kong and Singapore, Smith is targeting markets in Tokyo, Seoul, and Sydney, aspiring to replicate the interconnected commercial ecosystems that characterize Hongkong Land's Central portfolio.
"Our preference lies with ecosystems positioned centrally in cities, where infrastructure and transportation converge," he states. "Investing in a solitary office building in any given market simply does not align with our strategy."
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