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<p align="justify">Sun Hung Kai Properties (SHKP) is a holding company established in 1963 in Hong Kong. The company&#8217;s primary business is property development, and it is also the largest commercial landlord in Hong Kong. SHKP has undertaken many large scale infrastructure development projects, including the development of office buildings, luxury hotels and shopping malls. The company also deals in the development and subsequent sale of luxury condominiums and residential property. With vast experience and dedicated expertise, the group has completed projects spanning 33.7 million square feet in Honk Kong (SHKP, 2021). SHKP expanded its property development and management business across the shores in China and operated in the major provinces such as Shanghai and Guangzhou. Its main business remains development and management of the real estate, and it diversified its investment portfolio by venturing into the telecom business through its subsidiaries.</p>
<h2 align="justify">Competitive Rivalry</h2>
<p align="justify">Honk Kong&#8217;s property horizon is highly competitive. SHKP is one of the biggest companies in the real estate sphere; it is also met with companies with massive capital and expanding property development portfolio. Its main competitors are Hang Lung Properties Ltd (HLPL) and Swire Properties Limited (SPL). SHKP performed better than its competitors with bringing in the highest profit. In the year 2020, until June, the company recorded revenue of $10,711 million and net income of $3,017.58 million (Nikkei Asian Review, 2021). On the other hand, till December 2020, SPL posted $1721.89 million with a net income of $528.10 million (Nikkei Asian Review, 2021). HLPL posted revenue of $1160.26 million (Nikkei Asian Review, 2021). However, SPL has a better profit margin ratio than SHKP, and its profit margin was 30.67% compared to SPL&#8217;s 28.17%. The competition in the real estate development sector remains high ought to well-established private enterprises in the market.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The threat of substitutes remains low; it is really difficult to develop the best alternative with the product being offered. One of the leased properties&#8217; benefits is that most of the consumer with the most responsibility falls on the management company. Even with the increase in income per capita since 2015, people are more inclined to lease residential properties. Even with the yield squeezes in the last decade, the city&#8217;s assets are considered a safe investment (Wong, 2021). With the dynamics of the city and the products offered by the property developers, there seems to be no real threat of substitution exists. Therefore, the industry faces a low threat.</p>
<h2 align="justify">Threat of New Entrants</h2>
<p align="justify">The threat of new entrants remains low in high-end property development due to the usual barriers associated with the industry. Despite the high return on offer, the real estate sector is capital intensive and requires a significant capital investment upfront. This act as a deterrent for potential new businesses. The city-state is ranked third in the World Economic Forum&#8217;s Global Competitiveness Report 2019 and fourth in the World Bank&#8217;s Doing Business 2019 report, making the scarce real estate more valuable (Hurley, 2020). Other than that, tighter control on property acquisitions on foreign residents and stringent political regime makes it difficult to enter the real estate development business. It is difficult for aspirants to enter the market. Therefore, the threat remains low.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">It depends on various factors, but buyers usually have moderate bargaining power in the real estate segment. The primary buyers are the individuals or, if any, property management firms. In Hong Kong, usual buyers of high-end luxury apartments have financial resources to splurge on luxury condos, and they have plenty of options available. Because there are few available options for the buyers to choose from, with the financial prowess, they can be selective in the process; as a result exercising bargaining power. For the standard properties available for lease, usually, buyers don&#8217;t have much bargaining power as available apartments are scarce for lease in a certain price range. There is a serious divide between the state&#8217;s top earners and the people on the other side of the fringes, and income inequality is rising (Marques, 2020). It is also reflected in the property acquisition market, and buyers have overall moderate bargaining power.</p>
<h2 align="justify">Bargaining Power of Supplier</h2>
<p align="justify">The bargaining power of suppliers depends upon various underlying factors related to the industry and its supply chain. Usually, suppliers have moderate to high bargaining power in the industry. The usual suppliers are in the development stage are the raw material suppliers and skilled labour. Mega developers like SHKP has many suppliers lined up and can negotiate a bargain price for their bulk purchases. However, still, there are unforeseeable geopolitical circumstances that can make their supply chain fragile. Therefore, depending upon circumstances, suppliers can exert moderate to low bargaining power and affect the bottom line. Labour can put a serious strain on the project timeline, resultantly causing delays and cost overruns. Major reasons for labor unproductivity are unskilled labor and poor labour surveillance (Ameh, &; Osegbo, 2011). So, poor labour management can increase the product timeline and can negatively impact profitability. Therefore, skilled labour has higher bargaining power, and collectively suppliers can exert moderate to high bargaining power.</p>
<h2 align="justify">References</h2>
<p align="left">Ameh, O.J., &; Osegbo, E.E. (2011). Study of relationship between time overrun and productivity on construction sites. International Journal of Construction Supply Chain Management 1 (1). 56-67. DOI 10.14424/ijcscm101011-56-67<br />
Hurley, b. (2020). Hong Kong Real Estate Still Offers Long-Term Upsides Despite Protests. Mansion Global. Available at: https://www.mansionglobal.com/articles/hong-kong-real-estate-still-offers-long-term-upsides-despite-protests-211566<br />
Marques, C., F. (2020). Politics &; Policy. Hong Kong Must Tackle Its Worsening Wealth Gap. Bloomberg Opinion. Available at: https://www.bloomberg.com/opinion/articles/2020-11-17/hong-kong-needs-to-tackle-its-worsening-inequality<br />
Nikkei Asian Review. (2021). Hang Lung Properties Ltd. Available at: https://asia.nikkei.com/Companies/Hang-Lung-Properties-Ltd<br />
Nikkei Asian Review. (2021). Sun Hung Kai Properties Ltd. Available at: https://asia.nikkei.com/Companies/Sun-Hung-Kai-Properties-Ltd<br />
Nikkei Asian Review. (2021). Swire Properties Ltd. Available at: https://asia.nikkei.com/Companies/Swire-Properties-Ltd<br />
SHKP. (2021). Our Business. Honk Kong Properties. Available at: https://www.shkp.com/en-US/our-business/hong-kong-properties<br />
Wong, M. (2021). Why Hong Kong property market continues to entice investors despite yield compression. South China Morning post. Available at: https://www.scmp.com/business/article/3128323/why-hong-kong-property-market-continues-entice-investors-despite-yield</p>
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