Chapter 68

"Xiao Ming and Ah Hao are precisely because we see the potential for future development in the Special Zone that we are willing to take the lead and see if we can reach a cooperation agreement with the Special Zone Housing Administration for real estate development!" Li Xuan nodded and said, after hearing the other party's words, he felt a bit more goodwill towards this Liu Bureau Chief. "But we have a few questions that need to be clarified!"

"Mr. Li, I can sense that your view of the mainland is sincere and unbiased. If you have any questions, feel free to ask; there's no need to beat around the bush. We already consider you one of us, and we can discuss and solve problems together!" Cai Yongmin said at the right moment.

Li Xuan glanced around at everyone before speaking calmly, "Everyone probably already knows Ah Hao's identity; he is the son of Mr. Lin Guita of the Lin Group. I believe that before this, Director Cai and Deputy Director have already contacted large real estate development companies in Hong Kong, such as Lin Group Properties.

For those large companies, a bit less profit is a secondary issue; what they value more is risk avoidance. Therefore, unless the Deep Sea Special Zone shows very obvious potential for development, they are unwilling to venture into this murky water, which they see as full of unknown risks!

But Ah Hao and I are different. Ah Hao is unwilling to continue living under the shadow of the Lin Group and has the ambition to forge his own path in the business world! I happen to have some spare money and am willing to invest it! Both of us see the potential for future development in the Deep Sea Special Zone, so we decided to join forces and establish Fei Hong Real Estate!

Fei Hong Real Estate is a small company that was just established a few days ago. General Manager Ah Hao is a young student just starting out. We don't hide our disadvantages. However, compared to other companies, Fei Hong Real Estate has a clear advantage because Ah Hao has a father named Lin Guita as his backing.

Just like now, as soon as Fei Hong Real Estate was established, he immediately brought in Mr. Zhang Wenjin from Lin Group Properties, who has rich experience in the construction industry and a deep understanding of both Hong Kong and the mainland.

If Fei Hong Real Estate decides to invest in real estate projects in Deep Sea City, Ah Hao can leverage Lin Group Properties' strong design team to quickly produce detailed and reasonable project plans within a few days! These are things that Liu Cheng, the owner of Mei Li Group, cannot compare to, as he is in the wholesale and retail business and is actually an outsider in real estate!

Since Ah Hao has decided to break away from the Lin Group and forge his own path, I will take full responsibility for the financial issues! The current registered capital of Fei Hong Real Estate is one million Hong Kong dollars, and if needed, I can increase this amount tenfold at any time.

Before coming to the Special Zone, I just met with senior managers from Standard Chartered and HSBC banks. They are willing to provide credit guarantees of tens of millions of dollars for my other company, Hong Kong Oriental Electronics Technology Co., Ltd. So our strength is absolutely reliable!"

Li Xuan seized the opportunity to showcase their strength, decisively using Lin Guita's name to bolster Lin Yuhao's position, leaving the rest to Lin Yuhao to handle.

"Director Liu, Deputy Director Fu, I need to confirm one issue with you both. The clause about providing household registration for home purchases, which you promised in your previous cooperation with Mei Li Group for the Donghu Liyuan project, will also apply to our cooperation with Fei Hong Real Estate, right?" Lin Yuhao picked up the conversation according to the plan he had discussed with Li Xuan.

The others were still stunned by Li Xuan's mention of the bank's credit guarantee of tens of millions of dollars and had not yet recovered.

Only Director Fu Yaonan remained calm. He glanced at Li Xuan, who had a calm expression, and then answered Lin Yuhao's question, "Yes, that's correct! This policy has been approved by the Municipal Party Committee. If Fei Hong Real Estate is willing to invest in the Special Zone, your project will also be subject to this policy!"

Lin Yuhao let out a slight sigh of relief and spoke in a very sincere tone, "That's great! Shenzhen is too far from Hong Kong, and traveling between the two places requires passing through the Luohu Customs, which is very inconvenient. Selling real estate projects in Deep Sea City locally is not practical; they must be sold in Hong Kong.

It's unrealistic to expect Hong Kong residents to travel all the way to Deep Sea City to buy homes for personal use. According to our analysis at Fei Hong Real Estate, the group most likely to be interested in purchasing homes are those who have moved to Hong Kong from the mainland in recent years but still have family members back in their hometowns.

If buying a home in Deep Sea City can come with household registration, they can take care of their relatives nearby and solve the urban household registration issue for their family members. In your mainland, the gap between rural and urban household registration is a difficult barrier to cross. This incentive is enough to attract a large number of people to buy homes!"

Liu Yuanfei also nodded in agreement, "Before the liberation of Hong Kong, the total population was less than one million. In 1949, hundreds of thousands fled to Hong Kong, and during the three years of hardship, hundreds of thousands more secretly crossed the border. From 1977 to now, hundreds of thousands more have gone to Hong Kong, both legally and illegally. Most of these people from the mainland still have family members in the mainland!"

"Generally speaking, very wealthy people have already brought their entire families to Hong Kong, and the relatives left behind in the mainland may not be willing to go. The very poor can barely take care of themselves and cannot afford to take care of their family members. Only those who are neither too rich nor too poor are the most family-oriented!

So, after careful analysis, we found that most of these people are now ordinary citizens of Hong Kong with some savings but not too much. Therefore, the houses we prepare for them should not be too large, with 400 to 500 square feet being the best size!

Taking Tai Koo Shing in Hong Kong Island's Eastern District as an example, housing prices have been rising sharply in recent years, and the price of new units of the same size is over 500,000 Hong Kong dollars. If the price per square foot in Deep Sea City is set at around 250 Hong Kong dollars, a house would cost just over 100,000 Hong Kong dollars, which is only one-fifth of the price in Hong Kong, and it would definitely attract a lot of attention!" Lin Yuhao continued to speak calmly.

"The key issue now is how to divide the profits if Fei Hong Real Estate cooperates with the Special Zone Housing Development Company!" Li Xuan added.

This issue could only be addressed by the two bureau chiefs. Cai Yongmin and Fu Yaonan exchanged glances and then said, "Referring to our previous cooperation with Mei Li Group, we take 85%, and you take 15%."

"I disagree. We will be responsible for the entire project development process, while your side just waits to collect the money. Our share is too low!" Lin Yuhao shook his head and said.

"You can't look at it that way. The land we provide is the most valuable asset. According to your Hong Kong real estate development experience, land costs account for at least 70% of the total cost. In our cooperation, there is no need to pay for the land, so it is reasonable for us to take the larger share! Besides, after you get the land, you can apply for construction loans from the bank, and your financial pressure will be almost non-existent!" Fu Yaonan explained.

"Do you know why Liu Cheng was willing to accept such a low profit share?" Li Xuan spoke, drawing everyone's attention, "I guess your cooperation agreement did not specify that the proceeds from the sale of the buildings must be transferred to a bank account jointly supervised by both parties.

The sale of the buildings will definitely be handled by Mei Li Group in Hong Kong, and all the proceeds will first go into Liu Cheng's personal pocket. Only after the project is completed will he sit down with you to divide the money. Before that, you won't get a single cent, and all the funds will be used by him for free.

If something happens to Mei Li Group during this period, the funds he uses for turnover may not even reach you! Since you bear all the risks, he is naturally willing to accept a lower share!"

Fu Yaonan and Cai Yongmin's faces turned grim. After Li Xuan's explanation, they realized they had been foolish.

"Moreover, getting construction loans from the bank is not as easy as you think. At least, Mei Li Group would find it difficult to apply for a loan in Hong Kong for the Donghu Liyuan project in Deep Sea City, and even if approved, the interest rate would be high!

We are willing to take the risk because, after analysis, we believe that the project has a high chance of success when selling the units. As long as we can sell one-third of the units, we can complete the entire project, so we are willing to take the risk! Even if the units don't sell, we can only lose some of the initial investment, which we can afford!"

Selling units, or "pre-selling," means that the real estate project is still on the drawing board, but the company has already started selling the units to recover costs in advance. If the buyer is willing to pay the full price in advance, the real estate company will offer the maximum discount. The buyer can also choose to pay a deposit first and then pay in installments according to the sales contract, which offers less of a discount.

This method of pre-selling was first invented by the current Hong Kong tycoon, Mr. Ho Ying Tung, in the 1950s and 1960s. During the peak of the Hong Kong real estate market, even if you had the money, you couldn't buy a new unit; all the units were sold out as soon as the plans were released.