High-end office buildings attract companies, creating mid- to high-level job openings locally and catering to the needs of residents of nearby high-end residential buildings. Themed experience areas attract families and tourists. The community's large residential population and high-quality amenities, in turn, support the value and rents of the central business district and high-end properties.
"The affordable housing project has helped us quickly and accurately secure a massive customer base and build popularity. The real source of profit lies in the high-end commercial real estate we've developed and own in the surrounding areas, including Dragon Plaza, office buildings, theme parks, and high-end residential projects. The meager profits generated by the affordable housing construction itself can even be considered the necessary payment for obtaining preferential government policies, preferential land parcels, and this massive monopoly on customer traffic... the channel fees!"
"This strategy!" Lin Huowang said without fear of leaking out. "It's not just about building houses, it's about building a city! Using affordable, even marginally profitable, housing as a starting point, we'll attract a larger population, drive the development of diversified, high-value-added, high-end properties in the surrounding area, and form an internal economic cycle and a high-value brand.
Once the population scale effect and the agglomeration effect of the Longteng brand are established, the long-term rental income and asset appreciation potential they will bring will far exceed the traditional 'acquire land, build buildings, and sell buildings' model. Wherever Long Plaza is, it will become the core business district! It will be the center of asset appreciation!
MacLehose fell silent. He had indeed seen the commercial support section of the Lin Huowang document, but in that era, he could not fully understand this high-dimensional business model where "the dog pays for the wool, and the pig pays the bill."
In Hong Kong Island in the late 1970s, real estate developers' approach was primitive and efficient: acquire a piece of land, build a building, either residential or commercial, advertise, pre-sell the units, speculate on the properties based on expectations of continued rising housing prices, and sell them at high prices.
Or they could hold high-end properties and collect rent, then reap the benefits. In this golden age, as long as one has sufficient capital and access to well-located land, making money without doing anything is almost the norm.
Just like Li Ka-shing's Cheung Kong Holdings, which just defeated Hong Kong Holdings in the bidding for the property above the subway, as soon as the news of the winning bid came out, Cheung Kong Holdings' share price soared like a rocket.
Even though Cheung Kong was almost "poorer than its face" at the time, banks such as HSBC did not hesitate to provide tens of billions of loans to support its subsequent development.
Why? Because the market sees this as a guaranteed, highly profitable "golden egg." The core of the equation lies in the simple value chain of "location, development, and selling/holding."
To MacLehose, the plan proposed by Lam Ho-wang was undoubtedly superfluous. Hongkong Land already owned prime land in Admiralty and Central, and its sole business was high-end rentals and luxury residential development, generating profits sufficient to support its development.
Why go to all the trouble to develop large, affordable communities in remote areas, and even invest heavily in commercial centers and theme parks? The cost, effort, and potential risks seem completely disproportionate to the benefits.
Especially the pitiful profit figures for the affordable housing project in the plan—it's practically a loss-making scheme. Only one explanation seems plausible: Lin Huowang is playing a larger, non-commercial game: he wants to win over the people, gain immense social prestige and grassroots support, and establish an unshakable political foundation for his business empire.
But the price of doing so... hundreds of millions, even billions, of Hong Kong dollars in profits? MacLehose shook his head, thinking it was too crazy.
In front of MacLehose, Lin Huowang certainly would not fully reveal the future picture to MacLehose.
For example, the brand aggregation effect, long-term asset value multiplication, the ability to withstand economic cycles, and the efficiency advantage of acquiring land resources. He only needed to clearly explain the superficial logic of future plans, and then follow MacLehose's partially "correct" guesses and wrap them in a reasonable commercial veneer.
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