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1. Bidder confirms its interest in arts hub

2. Builders scrap hotel plans in favour of office towers

1. Bidder confirms its interest in arts hub
MAY CHAN , SCMP 27 January 2006

One of the shortlisted bidders for the West Kowloon Cultural District project yesterday publicly affirmed it intends to stay in the race to win the development tender.

Sunny Development - a consortium formed by Sino Land, Wharf (Holdings) and Chinese Estates Holdings - said: "The project is beneficial to Hong Kong. Sunny Development is interested in continuing with the project. We will support the government, respect the public's opinion and try our best."

The government has asked the three shortlisted bidders to indicate by the end of this month whether or not they wish to remain in the bidding process. Sunny's rivals, one controlled by Henderson Land and the other a joint venture of Cheung Kong (Holdings) and Sun Hung Kai Properties, said they would reply to the government today.

If two of the consortiums pull out, the government has said it will have to scrap the tendering process and start again.

A source told the South China Morning Post this week that neither of Sunny's rivals was likely to say yes or no to the government this month, and that a decision on who gets the tender would likely be delayed for several months.

Albert Lai Kwong-tak, chairman of the Conservancy Association's centre for heritage, said the government had only itself to blame if the project was delayed.

"If the government keeps negotiating with developers about delays and changes in requirements, it's breaking its promise. What it should do is formulate a proper cultural policy and master plan."

Ada Wong Ying-kay, of the People's Panel on West Kowloon, said the government should start the consultation on cultural development as soon as possible.

Hong Kong already has an arts hub without the West Kowloon project," Ms Wong said. "What we lack is the software ... and funding systems for budding talent."

2. Builders scrap hotel plans in favour of office towers
YVONNE LIU , SCMP 27 January 2006

Henderson Land Development and Sun Hung Kai Properties have cancelled plans to build hotels in industrial districts in favour of putting up office blocks which they see as offering greater returns.

Henderson was reported yesterday to have scrapped 10 of its mid-tier tourist hotel projects in Kwun Tong and San Po Kong which would have provided 2,756 rooms with a gross floor area of 1.73 million square feet.

Tony Tse, general manager of the company's sales department, said the premium charge for converting land from industrial to hotel use was similar to changing it to office use.

Henderson will continue with its plan for a hotel at 165-167 Wai Yip Street in Kwun Tong.

According to DTZ Debenham Tie Leung, 22 sites have been approved by the Town Planning Board for converting from industrial to hotel use since 2003, with a potential supply of 11,798 rooms.

However, seven of those plans, accounting for a total of 3,000 rooms, were later cancelled to make way for office buildings.

Alva To Yu-hung, director of consulting and research at DTZ, said developers were making the switch because they believed office projects would break even faster. This was because currently there is a limited supply of office space which means the office leasing and investment markets will remain very active over the next two to three years.

The Federation of Hong Kong Hotel Owners executive director Michael Li Hon-shing said there would be oversupply of hotel rooms if all the approved projects went ahead. The hotel occupancy rate has dropped by 2 per cent, following a 20 per cent increase in the supply of rooms last year.

Charles Chan Chiu-kwok, a director at Savills, said premium charge for converting land from industrial to office use would be about $2,200 per sq ft compared with more than $3,000 per sq ft for hotels.