Vincent Lo Plays Long Game With His Shui On Group, Making Big Bets In Shanghai Property As He Prepares Daughter Stephanie As Successor

This story is part of Forbes’ coverage of Hong Kong’s Richest 2023. See the full list here.

Despite woes in the mainland property market, Hong Kong billionaire Vincent Lo is playing the long game with his Shui On group, making big bets on Shanghai property and preparing his daughter Stephanie as successor.


Even as mainland China’s property market remains distressed, Hong Kong-based billionaire developer Vincent Lo sees a silver lining among the dark clouds. “There is no question the market is down, with so many developers overextended,” the founder and chairman of Shui On group says in an exclusive interview in Hong Kong in December. “But with all the trouble, there is also a great opportunity to buy low for the first time in many years.”

His comments came just as Shui On Land, the group’s flagship company, made good on his words: a day earlier, it announced that it had snapped up a large 17,000-square-meter parcel in Shanghai for about 2.4 billion yuan ($350 million). The acquisition was made through a joint venture with state-owned developer Shanghai Yangshupu, with Shui On Land owning 60%.

The move is typical of Lo, who is known for taking a long-term view, doing in-depth research and creating a meticulous masterplan for his projects. For those who doubt his approach, Lo can point to his success with a similarly bold bet he made almost a quarter century earlier in Shanghai: the Xintiandi project.

At the time it was a group of historic but rundown buildings that had escaped redevelopment because it was the district where China’s Communist Party was founded in 1921. “You have to remember, these were the early days for Shanghai and China. Now, everyone is in China, but this was right after the Asian financial crisis in 1997,” says Hei-Ming Cheng, chairman of real estate firm KaiLong, which has invested over $4 billion in more than 50 projects in China.

From 1998 to 2004, Cheng was general manager for Shui On Land in Shanghai. “Vincent took a huge, huge risk. And he was really visionary. He wanted to do something unique, and this was a well-planned, sophisticated project, which nobody was doing in China,” he says. “It was revolutionary and changed development in Shanghai and in China.”

Shanghai in those days was in the doldrums. “It was dark, even in the downtown and along the Bund,” Lo recalls. Shui On was still a minor Hong Kong firm when Lo was tapped by Shanghai officials to advise on how to protect the historic area. Lo brought in American architect Ben Wood, famed for his work reviving Boston’s historic Faneuil Hall. Wood put together a plan that preserved the buildings by using them for upscale restaurants, shops and entertainment outlets.

Opened in 2002, Xintiandi was an instant hit and remains popular to this day. It is both one of the most profitable real estate developments in China and Shui On’s most consistently profitable project in its history. Shui On Land’s Shanghai portfolio contributes roughly three-quarters of its total rental and related income, most of it generated by the award-winning landmark. In short, Xintiandi is the crown jewel of Lo’s long career in property.

Now as he contemplates his legacy, he is preparing his most important master plan, handing over to the next generation, again the result of careful research and planning. Lo, who turns 75 in April, talked about finding a successor as far back as 2011. He signaled that his daughter, Stephanie Lo, 40, was the heir apparent to take over the group when she was named an executive director at Shui On Land in 2018 (she first started working at Shui On in 2012). She is currently an executive director at Shui On Land and vice chairman and executive director of Shui On Xintiandi, the branch of Shui On that oversees Xintiandi.

She is joined at Shui On by her brother Adrian Lo, 34, who works as a director of corporate development at Socam, the Hong Kong construction arm of Shui On. He joined the company in 2018 after running his own restaurant and catering business for five years in Hong Kong. As of mid-2022, Lo and his children held the majority of shares in Shui On Land and Socam, and the two siblings appear to have a solid working relationship.

“Succession is never easy,” says Lo. Key to the process were consultations with his children and management. The talks went on for the better part of a decade, says Stephanie. “We all sat down together to discuss responsibility, what’s expected of us, and how to better craft his legacy,” she says. They all worked together on a family constitution, which Stephanie describes as a guide for the company and the culture the family wants to create for coming generations. “We had long discussions about the future,” says Adrian. “It was important to make sure that our values aligned.”

Lo has incentive to ensure Shui On’s continuity. His father, Lo Ying-Shek, founded real estate and hotel company Great Eagle 60 years ago. He died in 2006, leaving behind nine children who are still embroiled in a contemptuous inheritance feud. Lo’s mother, 103, and two of his brothers and a sister, are battling with another brother, Lo Ka Shui, who is chairman and managing director of Great Eagle. Vincent, who is a non-executive director at Great Eagle, says his father clearly designated Ka Shui to run the company. He laments that amid a slew of lawsuits he hasn’t visited his mother in years. “It’s tragic,” he says, determined it won’t happen at Shui On.

Stephanie says the company’s focus will remain the mainland and Hong Kong, where its “brand and our management, and our execution capabilities are much stronger.” She emphasizes the importance of Shanghai as an investment, saying it is “well on its way to becoming a global city.” The latest acquisition of the 17,000-square-meter plot on Pingliang Road in the Yangpu district will be developed as a mixed-use property that will include the preservation of heritage buildings but won’t be as high-end as Xintiandi, says Stephanie, who is spearheading China strategy with her father’s guidance. Analysts have generally applauded the purchase, which helps Shui On build its strong presence in Shanghai.

Wood, who lives in Shanghai, says, “The big challenge for Shui On isn’t who will run the company, but how they will survive in a China that is very different nowadays.” Competition is keener, and quality projects like Xintiandi are expensive, he explains. He says Stephanie’s background—a bachelor’s degree in architecture from Wellesley College, Massachusetts, and experience working for New York architecture and design firms—is an asset. “She knows architecture. She’s a great listener, like her father. She asks questions, and gets the opinions of everyone in the room,” he says.


Firm Foundation

Shui On Land continues to focus on Hong Kong and key cities on the mainland, spreading its property interests over office, residential, retail, hotels and serviced apartments. With 13 projects under construction, its leasable and salable holdings could expand in coming years.


Stephanie says a key plank in her approach to the business will be making Shui On Land’s operations more sustainable. Green consultants note that the construction industry has huge carbon outputs, and there are few answers to making steel and concrete production more eco-friendly. However, Stephanie is pledging to reduce the company’s carbon footprint by 65% by 2030. Many companies talk about carbon reduction, says Eric Ricaurte, founder and CEO of Greenview, an ESG consultancy in Singapore, but “Shui On is really trying to make a difference by committing to these ambitious goals, and making them public.” He adds: “That’s really rare, especially in China.”

Another area that might need extra work is the company’s attempts to replicate Xintiandi in second-tier mainland cities such as Dalian, Hangzhou and Wuhan. These projects have had mixed results. “Shui On wanted to push the envelope with these very sophisticated projects,” says James Macdonald, head of Savills Research China. But they may have moved into those cities too early, and with developments that were too costly, he says. Meanwhile in Shanghai, Lo was able to add to Xintiandi, creating Taipingqiao, a larger community that covers 52 hectares (roughly 80 U.S. city blocks) with some of the most expensive residential and office space in the city, as well as a park and an artificial lake.

Shui On needs to reboot after the turmoil of the Covid-19 period. Shui On’s fortunes slid along with China’s economy during the pandemic, hit by lockdowns and a blow-out in the mainland property market after the government cracked down on borrowing by developers. The estimated value of the real estate sector fell 5.1% in 2022, according to the National Bureau of Statistics, while investment in the industry dropped 10%, the first decline since records began in 1999.

Shui On Land’s shares and earnings plummeted in tandem, prompting it in March 2022 to delay a planned Hong Kong IPO of its Xintiandi assets, something Lo says might be revisited if market conditions improve. Profit attributable to shareholders more than halved in the first half of the year to 450 million yuan, while revenue plunged 63% to 4.4 billion yuan. While contracted sales surged 55% in the period, to 18.7 billion yuan, they are down 10% at 27.2 billion yuan for the year (the company has yet to release its full 2022 results).

The company’s Hong Kong-listed shares bottomed out at the end of October and have since rallied, placing Lo at No. 43 on Hong Kong’s 50 Richest list with an estimated $1.7 billion net worth. “We’re in a very solid position,” says Lo. “I’m excited by the opportunities.” China introduced measures to support the property market in November, but Lo and others in the sector believe that with big mainland firms such as China Evergrande Group and Shimao Group facing default, a shakeout remains inevitable. “Then, there will be fire sales,” he adds, noting that Shui On Land has cash of 15 billion yuan, ready to buy distressed assets. KaiLong’s Cheng says prices in major cities have already tumbled about 30%, with some buildings selling for 2018 prices.

Shui On remains on a strong footing. As of mid-2022, Shui On Land’s landbank stood at 9.4 million square meters, 6.9 million of which was salable or leasable. It had 13 projects under construction in major cities around China. The group also has holdings in Hong Kong, where Lo founded the company in 1972 with a $100,000 loan from his father. As well as selling and leasing property, the company earns income from rental and retail operations, including over 600 food and beverage outlets.


Under Construction

Earnings suffered in the first half of 2022, due to Shanghai’s pandemic-related lockdown, construction delays and a weaker yuan, but contracted sales signal better times.


Lo is also invigorated by a renewed sense of opportunity in Hong Kong. Pro-democracy protests that started in 2019 and pandemic lockdowns have pushed the financial hub into recession twice since 2020, but analysts expect a recovery this year. Lo says the city “has regained its sense of stability.” One bright spot is the Greater Bay Area plan, which aims to integrate nine cities in southern China with the two special economic zones of Hong Kong and Macau. The region has a population of 86 million people and GDP of nearly $1.7 trillion, according to the Hong Kong government. As an independent economy, it would rank eighth in the world, Lo says.

“Beijing wants Hong Kong to become an innovation and technology hub,” says Lo. The city would serve as the international finance center for the Greater Bay Area with its well-established banks and legal system. “So, it’s Silicon Valley plus New York,” he says. “I think this is a very, very bright prospect for Hong Kong.” He notes that Shui On Land is well-placed to benefit. Besides its strong roots in Hong Kong, it has its mixed-use project in Foshan, one of the Greater Bay Area cities, which will help it to build a strong presence and identity in the zone.

With opportunities opening up again as mainland China goes back to business after holding back during the long Covid-19 lockdown, Lo is finding it hard to slow down, even as he prepares Stephanie for succession and gives Adrian more responsibilities. “Did he tell you he was taking time off?” asks Stephanie, laughing. “I hope to have a semi-retirement,” Lo says, but concedes it is a work in progress. “I think this is in the context of him really loving the work,” says his daughter. “So, if you’re asking if he’s taking time off to do what he loves, he loves his work.”

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