Pattie Lovett-Reid: The inheritance lesson from a Hong Kong property tycoon
The heir to the biggest real estate agency in property-mad Hong Kong doesn’t own a house.
Not only that, he won’t inherit his father’s stake in Centaline Group, estimated to be worth about US$400 million according to the Bloomberg Billionaires Index, because it was donated to charity more than a decade ago.
But Alex Shih isn’t perturbed, even though he’s missing out on the wealth that the offspring of some Hong Kong tycoons are taking control of along with the family business. Li Ka-shing, the city’s richest man, last year handed the reins to son Victor, while billionaire Lee Shau Kee last month said he was considering retiring from Henderson Land Development Co. and putting his two sons in charge.
“I personally accept it,’’ the 30-year-old Shih said of his father’s decision not to pass on the family fortune to his three children. “He told us when we were very young and we didn’t have a choice. He would say that it’s better not to lead a life that’s too comfortable in one go. You’ll treasure more if you gain things step by step.”
Shih took over running Centaline, which handles two out of every five property transactions in Hong Kong, at the start of this year when he was named vice-chairman. He is set to become chairman when his 70-year-old father Wing-Ching Shih retires, which he expects to happen sometime soon.
He ascended to the top job after a difficult year for Centaline, which was founded in 1978. Commission revenue rose a bare 1 per cent to about HK$19 billion (US$2.4 billion) last year, and net income slumped 52 per cent to HK$501 million, as a downturn in Hong Kong’s property market and growing competition in mainland China took its toll.
Hong Kong’s property market has since rebounded, and Shih is looking to modernize the agency. He oversaw the introduction of virtual-reality house viewing in 2017, and more recently a blockchain platform to streamline sales and rental agreements.
“The company is like a big ship,” Shih said. “I am trying to provide new technology tools to make it move faster.”
While the firm handles millions of dollars of transactions a day, the softly-spoken Shih says he earns only a regular salary. The foundation that his father donated the Centaline stake to aims to alleviate poverty in rural China, from building infrastructure to supporting under-privileged children’s education.
“My friends who are working in finance are making more money than I do,” he said.
A graduate of the London School of Economics and Political Science, Shih said he considers himself an average Hong Kong citizen. His office is small and sparsely decorated, and he enjoys hiking and playing badminton -- hardly the pursuits of the billionaire set.
His modest upbringing has also helped keep him humble -- his father eschewed the elite international schools favored by Hong Kong’s wealthy and enrolled his children in local government-subsidized schools, and instilled his philosophy that money should be used to help the less fortunate from an early age.
He even worked as a real estate agent when he first joined the family business. “It was quite tough -- staying outdoors to compete with other agents for limited customers, rain or shine.”
And, like many other millennials in a city ranked the world’s least-affordable for the past nine years, he’s still saving for his first house.
Shih’s advice to his peers? Be realistic.
He aims to buy a two-bedroom apartment in a middle-class neighborhood in West Kowloon -- or the slightly more upmarket Ho Man Tin area if his parents chip in, citing those areas good public transport links and potential for price growth as draw cards -- a far cry from the multi-million dollar mansions his agency sells.
“The first home may not be the one you want the most. But at least you get on the property ladder and then you slowly climb up.”