A century-old wealthy family that rose from Shanghai

Chapter 118 Big Project

One day in mid-September, Cheng Zikang, general manager of Jincheng Bank's Shanghai branch, invited Chen Guangliang to have tea and discuss business.

Starting around this time last year, Cheng Zikang received support from headquarters and actively purchased considerable land and built properties in the Shanghai Stock Exchange.

Now, a year has passed, and the land and properties in Shanghai have indeed seen a good increase, so Cheng Zikang can be said to be in high spirits and has won the trust of Zhou Zuomin, the founder and general manager of the headquarters.

In Cheng Zikang's mind, the young man Chen Guangliang is not only good at analyzing real estate trends, but also good at real estate development; after all, "Happy Home" and "Sunshine Home" have become benchmark projects in the Shanghai real estate industry.

"Guangliang, why hasn't your Changjiang Real Estate secured any new projects recently? Given your reputation, it shouldn't be difficult to secure a third project."

Upon hearing this, Chen Guangliang humbly said, "We're just a small real estate company. Having some credibility wouldn't be enough to make anyone chase us for a partnership. Of course, Wang Xiancheng, the comprador for the British Mercantile Bank (Standard Chartered), approached us seeking a partnership. But at the time, I felt that the western and central sections of Yuyuan Road had already developed enough new lanes, and that purchasing power might be insufficient in the short term, so I didn't agree."

Young and cautious, Cheng Zikang commented in his heart.

Cheng Zikang then continued, "It's better to be cautious. After all, you have the financial strength. But having said that, thanks to your reminder last year, I also participated in land investment and property development on behalf of Jincheng Bank. Now that a year has passed, I have gained a lot. Speaking of which, I should thank you!"

When he said this, he sounded more proud than grateful.

After all, it's not a matter of "thanks". Cheng Zikang also helped Chen Guangliang, and the "Happy Home" project was the cooperation guarantee he provided.

At this point, Chen Guangliang changed the subject and said, "Manager Cheng, is your bank still investing in land and properties?"

Cheng Zikang laughed and said, "Let's not even talk about our bank. Even the four southern banks and the other three northern banks have been actively investing recently. But this time, we're ahead of everyone else, almost a year ahead of schedule. Actually, the reason everyone is doing this is because the deposits in various banks have increased, and they urgently need to find a way to invest their funds."

Chen Guangliang also knew this. It seemed that starting from 1927, the funds of Shanghai banks began to increase rapidly. Perhaps wealthy people from all over the country flocked to Shanghai. Some warlords also fell and came to the Shanghai Concession with huge sums of money to take refuge. Lu Zhenhua in the previous life's "My Fair Princess" was in such a situation.

As banks' funds increase, they naturally have to find a way out for these funds. Otherwise, the annual interest rate of 8% on large long-term deposits will put the banks under pressure.

Chen Guangliang suddenly had an idea at this time, and immediately said to Cheng Zikang: "In this case, why don't you invest a big sum?"

Cheng Zikang asked curiously, "What big one?"

Since last year, Jincheng Bank has invested millions of dollars in purchasing land and millions more in property development. He believes that this is a considerable amount of money.

Of course, in the final analysis, Jincheng Bank did not invest in core assets such as Nanjing East Road and Huangpu Beach Road, which are still controlled by foreigners. Moreover, an acre of land in these places costs 20 to 40 oceans, which is often millions of oceans, making it difficult for Chinese capital to afford them.

Chen Guangliang said, "Hartung owns a plot of land on Nanjing Road. It's in an excellent location and is square. It faces Shandong Road to the east, Shanxi Road to the west, Jiujiang Road to the south, and Nanjing Road to the north. It's about nine mu (approximately 9 acres). If we negotiate for it and build a department store and name it 'Jincheng Department Store', first, we can make a profit from renting it out, second, it can enhance the reputation and brand of Jincheng Bank, and third, it can provide a way out for your bank's funds. It's like killing three birds with one stone."

Cheng Zikang was immediately tempted after hearing this. He was currently in high spirits and being praised by the headquarters, so it was inevitable that he wanted to make new contributions.

"How did Guangliang know so much? Could it be that you've been tempted to develop this land using the 'Happy Home' model?"

It is unlikely to be trapped. After all, there is a huge level gap between the two sides. It is just pure curiosity.

Chen Guangliang nodded and said, "I'm certainly tempted. I've done a rough calculation. Hardoon only spent 14 taels of silver on this piece of land, and now it's worth more than ten times that. If we can negotiate the annual rent down to 15 to 18 taels of silver, payable quarterly, and then build an eight-story department store, the rent could be around 8 taels of silver. After deducting the land tax, we could still make a profit of 30 to 5 taels of silver a year."

Upon hearing this, Cheng Zikang quickly asked, "How much is the estimated investment for construction?"

Chen Guangliang said: "More than 45 yuan, but now renting a house requires a transfer fee. The first year's transfer fee alone can bring in 20 to 25 yuan. Ultimately, the biggest risk for investors is the land rent and land donation."

The rent for this land was far higher than the construction costs. After all, the land price on Nanjing Road was 20 to 30 yuan. The land owned by Hardong was worth around 150 to 200 million yuan, so the annual rent was unlikely to be less than 15 yuan.

Cheng Zikang quickly calmed down and said, "It's indeed very good, but this kind of business will take at least two years to build, and the rent generated will be as high as 40 yuan, which is a huge increase in costs."

Chen Guangliang said, "Of course, there are risks. After all, the rent is too high. If leasing is not smooth, your bank may suffer significant losses. In addition, Jincheng Bank is not an expert in the department store market. Companies like Sincere and Wing On have many advantages. Therefore, to ensure stable rents, we must carefully plan the layout of each floor, which requires a new business model."

Cheng Zikang saw that Chen Guangliang had done a lot of homework and immediately asked, "What kind of business model?"

Chen Guangliang replied, "I call it the 'shopping center' model. Unlike the traditional department store model, the shopping center model is 'leasing' rather than 'self-operation'. After all, real estate developers are unfamiliar with department store retail. However, if they can attract the best retailers to the mall and ensure quality, they can create a shopping center. Furthermore, shopping centers emphasize self-service shopping, allowing you to buy whatever you like, which adds a certain sense of shopping to the core."

Cheng Zikang was confused and said, "Guangliang, is it that you already have a good plan, but you are struggling with the pressure of funds and risks, so you told me this idea?"

Chen Guangliang nodded calmly and said, "Not only that, I also hope that Changjiang Real Estate will act as a consultant and charge you a consulting fee. The above is a gift to you. The layout of the building and the creativity of the shopping center are the key factors that truly enable this building to maintain stable rents."

He calculated that if the deal was finalized this year and construction began next year, the hotel could open before the Battle of Shanghai. This way, attracting the first batch of tenants wouldn't be a problem.

Moreover, he also wanted Changjiang Real Estate to enter the commercial real estate field early to accumulate certain experience and talents. However, he was not willing to take the risk and was not willing to gamble on it.

What's more, Hardoon may not trust him and may not rent him to a "speculator".

A popular ballad at the time went like this: "Hartung, Hartung, different from the others. Guarding the gate, living frugally; saving money to build roads, benefiting the people. Build roads, build roads, and wealth will flow in."

This piece of land on Nanjing Road was purchased by Sir Arthur Hardoon in his early years for just over 14 taels of silver. But as everyone in Shanghai knew, getting a piece of land from Sir Arthur Hardoon was like pulling teeth from a tiger's mouth.

Upon hearing this, Cheng Zikang decisively said, "Alright, I'll arrange for someone to investigate and analyze this project, and then our headquarters will decide whether to invest. If this is feasible, I'll definitely invite Changjiang Real Estate as a consultant and pay you the consulting fee you deserve."

He was full of ambition at the time, and since this project was so good, he was naturally very happy to invest.

"it is good"

Chen Guangliang also wanted to take advantage of Cheng Zikang and Jincheng Bank's power, not only to earn some consulting fees, but also to step into the field of high-end real estate and even deepen cooperation with Jincheng Bank.

In fact, if he had approached Chen Guangfu of the Shanghai Commercial and Savings Bank to discuss this project, there would have been little hope, as Chen Guangfu might not be interested in it.

On the other hand, Chen Guangliang approached Cheng Zikang of Jincheng Bank. This "Northern Bank" was in urgent need of opening up a bigger market in the Shanghai Stock Exchange, and Cheng Zikang's mentality and other factors gave it a great chance of success.

Of course, this project was ruined by Tan Lisun of Continental Bank in the previous life, causing Continental Bank to lose millions.

In other words, this is a 'loss-making project'!
Chen Guangliang also introduced him to Cheng Zikang for three reasons:
First, he wanted to collect consulting fees and valuable experience, and future losses would be at least after 1937 and would have little to do with him;
Second, the project was launched two years ahead of schedule, and it must have been put into operation before the "First Battle of Shanghai" in 1932, so at least it was very successful at the beginning; and the Great Depression did not reach Shanghai until 1933, so it was not a big problem.

Third, the birth of the concept of "shopping mall" may not necessarily have a huge impact on the "four major department stores" on Nanjing Road, such as Sincere and Wing On, and perhaps the situation will not be so bad.

In summary, in order to utilize Cheng Zikang and Jincheng Bank to achieve the experience and profits of Changjiang Real Estate, Chen Guangliang must have pushed Jincheng Bank to do this.

Originally, Chen Guangliang had come up with a plan, which was to use the "Happy Home" model to "pre-sell" the building and transfer the risk to investors.

But there are too many problems and risks involved, and Chen Guangliang may end up losing money; the subsequent troubles are not something he can handle.

Apart from anything else, it is not easy to fool the land owners mentioned above. Once they see that Chen Guangliang wants to invest, they will ask you to pay at least half a year to a year's rent. If Chen Guangliang cannot sell it, he will directly lose hundreds of thousands of dollars.

With so much money, Chen Guangliang’s year-long efforts were in vain!
So, it’s better to introduce it to Cheng Zikang, and Changjiang Real Estate will just get some benefits.

When they returned to Changjiang Real Estate, Guo Deming and Lu Yuantai found Chen Guangliang.

"Boss, the owner of a piece of land in the middle section of Yuyuan Road wants to cooperate with us. The land covers an area of ​​13.5 mu. The owner is the descendant of a bureaucrat. He asked for an annual rent of 5500 yuan, and the house will belong to him in years."

After hearing this, Chen Guangliang became interested.

Because the geographical location of the middle section of Yuyuan Road is still good, in fact, the entire western and middle sections of Yuyuan Road were basically "new-style lanes" and a small number of garden villas in later generations; only in the eastern section, the later Paramount was built in this place, so the commercial value was also reflected.

"Rent isn't a problem. I'll go check out the land later!"

"Ok"

Today, Changjiang Real Estate is very famous on Yuyuan Road, especially the "Happy Home" which is almost completed and has become a golden signboard.

Therefore, the goal that Chen Guangliang set for the company at the beginning was to develop only on Yuyuan Road for the time being to avoid certain risks.

Yuyuan Road was within the scope of the International Settlement, so even if the Japanese occupied Shanghai, they could hold out until 1941. At that time, Chen Guangliang's affairs were basically over.

"By the way, the company needs to recruit two more people, young people with a certain cultural foundation and a willingness to learn. In addition to the project you just mentioned, there may be another large project we need to participate in."

"Okay, we'll arrange it right away!"

Currently, Changjiang Real Estate has a total of six people. Guo Deming and Lu Yuantai are considered Chen Guangliang's deputies, while the others are employees. Furthermore, Guo Deming and Lu Yuantai also receive 2% each in profit dividends from Happy Home and Sunshine Home, effectively making them shareholders.

Of course it's worth it. In this day and age, if you want talented people to be loyal, dividends are essential.

Chen Guangliang's arrangement to recruit more people this time is also because he hopes that Changjiang Real Estate can cultivate a good team that can be used in Hong Kong in the future.

(End of this chapter)