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1. Urban renewal is about more than money

2. $1b projects face Friday deadline

3. Call to take back land from airport

4. Watchdog plan for privatised airport

5. Dim hope for cheap deals in land sales

6. Tycoon hits new heights with property on The Peak

1. Urban renewal is about more than money
ALAN DALGLEISH, SCMP 3 March 2004

The old dinner party line "Hong Kong will be nice when it is finished" reflects the seemingly never-ending building and construction cycle we are all so familiar with.

That well-worn line continues to be relevant today, judging by recent articles in this newspaper which highlighted an Urban Renewal Authority (URA) scheme at Lee Tung Street, Wan Chai.

The story so far is that this well-known street is to be redeveloped from 2006 as part of an URA scheme comprising sections of Johnston Road, Tai Yuen Street and Queen's Road East. Some controversy has arisen because Lee Tung Street is home to many printers who specialise in wedding invitation cards, some of whom, as property owners, are holding out against the URA offers of financial compensation. Understandably, they are miffed at the prospect of having to relocate.

Unfortunately, the relocation of residents and businesses to make way for urban redevelopment is all too common in Hong Kong. Indeed, this activity can be viewed as essential if the city is to continue to grow and prosper. And do not forget that many relocated residents and businesses readily accept the financial compensation offered to them to move.

The fear lingers, however, that displaced residents will be relocated far from their familiar communities, and that a long-standing part of Hong Kong's vibrant street retail scene will be lost forever.

Part of the backdrop to this issue is the sheer difficulty that surrounds this type of urban scheme. Fragmented ownership patterns, with up to several hundred owners to be negotiated with, make site assembly incredibly difficult.

Determining which buildings might be redeveloped is a tough call, too. At first sight, a six-storey walk-up - post-war or even older - looks a likely candidate for the wrecker's ball. But take a closer look. Can you spot the new aluminium window frames, the refurbished exterior? Dilapidated in places, yes, but there are clear signs that residents will accept certain standards to live in or close to the urban area, where so many people work these days.

Urban redevelopment can take a long time. In 1989, in its previous guise as the Land Development Corp, the URA announced two schemes in Central and one in Mongkok. The former were eventually completed (duly replacing residential areas with office towers), while the Mongkok scheme is to be finished only this year, making it a 15-year project from start to finish.

These days, stronger statutory property resumption powers probably mean that such extreme cases would not occur. But urban redevelopment will likely continue to be a difficult process. And the worry remains that the redeveloped area will be just another high-rise scheme, with the character of the area lost.

The interesting backdrop to this complex issue is that people these days seem much more vocal about their likes and dislikes on what goes on around them. For example, many readers are familiar with the debate over the harbour reclamation.

The danger of voicing one's opinion is when it leads to a rigid polarisation of views. In the urban renewal context, at the one extreme it makes little economic sense for the city to remain much as it is today. At the other extreme, none of us wants to see "old Hong Kong" totally eradicated to make way for concrete canyons of office blocks.

Surely the solution in this case is in the middle ground, where extreme standpoints can meet to the mutual benefit of all.

This approach calls for creative plans to preserve the character of the urban area, and at the same time offer growth opportunities. Redevelopment activities are pretty much driven by a financial compensation structure that encourages existing owners to take the money and run. Might it be possible to revisit this structure so that the government de-emphasises the "knock-it-all-down" style of redevelopment and encourages more urban renewal in the true sense - refurbishment of existing structures?

This approach calls also for courage on the part of the government to find an acceptable balance between profit and loss. Can it balance the desire to use tax dollars effectively, for a profit at all times (or face the wrath of taxpayers), against the desire to do something that may not generate an immediate profit but is for the greater good: creating and maintaining an urban landscape that Hong Kong people and visitors can be justifiably proud of?

If the shenanigans over the harbour are anything to go by, I sense the tide is turning.

2. $1b projects face Friday deadline
Keith Wallis, The Standard 3 March 2004

Architects and engineering firms are bidding for four schools and health care projects totalling around HK$1 billion planned by the Architectural Services Department. Technical and fee proposals are due to be returned on Friday.

The largest deal involves the development of two primary schools at Hiu Kwong Street in Sau Mau Ping and Sham Tseng. Four architectural firms have been chosen to bid for the scheme. These comprise Andrew Lee King Fun & Associates, Dennis Lau & Ng Chun Man, P&T Architects and Engineers and Wong Tung & Partners.

Other consultants shortlisted to bid are Parsons Brinckerhoff (Asia) and JRoger Preston for building services engineering; Ove Arup & Partners, Maunsell Structural Consultants and WSP as structural engineering consultant; and Urbis, Team 73 and ADI as landscape architect.

Four architectural firms have also been chosen to bid to design a primary school at Victoria Road and Pok Fu Lam Road on Hong Kong Island.

They are: Arthur CSKwok, Design 2, Taoho Design Architects and Tom Ip & Partners.

Two building services consultants - Thomas Anderson & Partners and P&T (M&E) - are tendering to design the mechanical and electrical services such as plumbing, lighting and fire protection.

Four engineering consultants - Ho Tin & Associates, P&T Architects and Engineers, Canwest Consultants (International) and Atkins China - are preparing tenders for the structural engineering contract. A further four consultants - Mott Connell, Halcrow China, Mouchel Asia and Atkins China - are bidding to design the geotechnical engineering works.

Similar groups are bidding to design and engineer a primary school at Kwai Shing Circuit in Kwai Chung. The Percy Thomas Partnership replaces Design 2 to join the same three other architects in competing.

Daniel Chan has joined Thomas Anderson and P&T (M&E) to bid for the building services design, while tenders from CMWong, Wong & Cheng and Canwest Consultants are being sought for the structural engineering design.

The ASD is asking four architects - Arthur CSKwok, Chung Wah Nan Architects, Design 2 and Tom Ip & Partner - to design a replacement Pak Tin Children's Centre in Cornwall Street, Sham Shui Po.

Four engineering firms - Thomas Anderson & Partners, Rankine & Hill, Daniel Chan & Associates and P&T (M&E) - are shortlisted to bid for the building services design contact.

Consultants selected to bid for the structural engineering design contract are Canwest Consultants, Atkins China, BMMK Ratcliffe Hoare and Wong & Cheng.

3. Call to take back land from airport
Jonathan Tam, The Standard 3 March 2004

Lawmakers have asked the government to retrieve about 120 hectares of undeveloped land at the airport before the listing of the Airport Authority, to prevent the authority from becoming a property developer or engaging in non-aviation business.

They voiced concerns yesterday that the authority might follow the lead of rail operator MTR Corp, whose major income source now comes from property development, or move into the logistics and land transport sectors.

``Can the government take back all undeveloped land at the airport and sell it in an open bid? I'm concerned that the AA will become another property developer like the MTR,'' independent legislator Abraham Shek, who represents the real estate and construction industries, said.

The Airport Authority was granted 1,200 hectares of land in 1995 for the development of Hong Kong International Airport at Chek Lap Kok, and about 90 per cent of it was used for runways, passenger terminal and supporting facilities such as air cargo handling.

The government is proposing to sell shares in the Airport Authority as a part of a five-year HK$112 billion asset sale plan to help cut the deficit. The administration has told lawmakers that, because of the privatisation, there is no plan to grant more land to the authority.

It is understood that most of the vacant land is in the northeast of the airport, where the new exhibition centre is being built, as well as in the south, between the Government Flying Service and Cathay Pacific City.

The Airport Authority derived HK$163 million of its total HK$5.4 billion revenue last year from real estate, which included the Regal Hotel and office rental from airlines. Shops and restaurants, meanwhile, yielded HK$1.7 billion in terminal commercial revenue.

It does not get rent from the 3.3 hectare Cathay Pacific City, for which the carrier paid a HK$5 billion premium for a 50-year lease.

Cheung Man-kwong, of the Democratic Party, yesterday supported selling the undeveloped land by an open bid, saying the airport might otherwise be tempted to expand into other sectors, such as logistics.

James Tien, of the Liberal Party, said: ``We've just solved one problem with MTRC and Kowloon-Canton Railway Corp [regarding property development], this may well be another one coming up. The airport is already building a hotel and an exhibition centre, it can do anything it wants with the land, like building a casino.''

The Airport Authority is planning to build a second hotel at the Chek Lap Kok that will compete with the five-star Regal Hotel complex. It is also building an international exhibition centre, called AsiaWorld-Expo, a golf course and the SkyPlaza commercial and retail complex.

Secretary for Economic Development and Labour Bureau Stephen Ip said taking the land back from the authority would involve complicated legal procedures. ``It's a serious matter, but since the privatisation needs the approval of the lawmakers, we will study their views carefully,'' Ip said.

Howard Lee, Principal Assistant Secretary for Economic Development and Labour, said any land development had to comply with the master plan for the airport and must be approved by the Lands Department. There were also other restrictions, such as height limits.

Analysts said retrieving the undeveloped land would not hurt the airport's valuation substantially as its major income was from landing fees and related charges.

Nevertheless, ``the situation needs to be sorted out before the listing, [as] investors aren't fond of arguments like this'', Sun Hung Kai Investment Services strategist Edmond Lee said.

4. Watchdog plan for privatised airport
JOSEPH LO, SCMP 3 March 2004

An independent watchdog could be formed to help regulate the Airport Authority after its privatisation, legislators were told yesterday.

Speaking at a meeting of Legco's panel on economic services, government officials also said that it was "reasonable" to assume that 25 per cent of the authority would be sold to private investors.

But a paper on the government's proposed privatisation of Chek Lap Kok airport will not be completed by the end of this year, giving time for more public consultation on these issues, Secretary for Economic Development and Labour Stephen Ip Shu-kwan said.

Howard Lee Tat-chi, principal assistant secretary for economic development and labour, said there might be a need for an independent watchdog to help the government regulate the authority. "We may need a relatively independent [body] to watch over, for instance, the Airport Authority's charging levels."

Deputy Secretary for Financial Services and the Treasury Martin Glass told members that the airport's privatisation would probably follow the lead of the MTR Corporation. When it was privatised four years ago, the government sold 25 per cent to the public.

There would also be a particular concern to get as many Airport Authority shares as possible into the hands of small local investors rather than large overseas institutional investors, he said.

Mr Ip said the focus this year would be on completing the authority's $6 billion capital restructuring programme announced last month.

In response, panel chairman James Tien Pei-chun said that meant there was also sufficient time for Legco to take testimony from other groups that have a direct interest in the airport's privatisation plans, such as the labour unions and airlines, by the end of this year.

Some legislators were concerned about how the authority would be controlled in a post-privatisation environment, in terms of its monopoly position as the only airport in Hong Kong.

Other legislators also questioned whether the government had given the Airport Authority the land it is occupying, and if it should be made to return unused land or pay to be allowed to keep it.

Mr Ip sought to placate those concerns by saying that the government's philosophy on maintaining control over a privatised Airport Authority was to maintain its majority shareholding.

"It will only be a partial privatisation. Government will still be the majority shareholder ... and be represented on its board."

He acknowledged that there were still many details of the privatisation that had yet to be worked out, hence the need for more time to draft the paper and conduct public consultations.

On the land issue, he said it was unlikely that the government would take the "big step" of taking back unused land on the airport island, which was granted in exchange for the authority taking responsibility for the reclamation that makes up large parts of the airport.

5. Dim hope for cheap deals in land sales
SANDY LI, SCMP 3 March 2004

Developers' hopes of picking up bargains at upcoming public land sales look set to be dashed as the government resumes a high land price policy to help balance the huge deficit.

Industry observers said expectations the government would follow such a policy were bolstered when it raised the reserve prices for properties on the application list by about 20 per cent to 25 per cent in response to rising home values.

"So far, no developer has successfully applied for any parcel on the list. One of the market suggestions was the government's asking prices were higher than expected," one analyst said.

The government resumed land sales in January after a 13-month land freeze, freeing up 17 sites expected to produce just 7,800 flats within about four years.

Under the application list system, a developer proposes a price to the Lands Department and undertakes to offer that amount. If the government's criteria is met, the parcel is brought to tender or auction.

Chinese Estates Holdings reportedly applied for four properties on the list but failed to meet the government's target price. Other developers, including Nan Fung Development and K. Wah International also declared interest in applying for sites on the list.

Real-estate professionals and academics said the government had resumed a high land price policy because of the importance of a property-led financial regime in generating sufficient public revenues.

Last Saturday, the government announced the budget deficit had dropped to $45 billion in January from $71 billion.

Eddie Hui Chin-man, associate professor of building and real estate at Hong Kong Polytechnic University, said the limited number of sites offered for sale through the application list system, coupled with controlled housing supply, would push up land prices.

The Rating and Valuation Department says 27,700 flats will be completed this year and 27,700 next year, down from last year's figure of 30,500.

Housing chief Michael Suen Ming-yeung predicted in October that only 10,000 flats would be built in 2006 and 4,000 in 2007.

With a scarcity of new land, developers facing a land bank shortage would be keen to bid, pushing up prices, Mr Hui said.

Henderson Land Development, K. Wah International and New World Development have raised more than $11 billion in the market, either for land acquisitions or debt repayment.

Mr Hui said he would not be surprised to see home prices move up another 20 per cent if the outcome of the first land sale exceeded market prices.

Hong Kong followed a high land price policy under British rule, controlling land supply every year.

Since reverting to Chinese rule, the administration has ensured abundant supply of land and residential properties.

Mr Hui said the government had little option but to return to a high land price policy to make up its huge deficit in the face of increasing difficulties in broadening sources of tax revenue, such as introducing sales tax.

Land sales and stamp duty contributions to public coffers slumped to 7.5 per cent in 2002 from 28 per cent during the property market peak in 1997, according to government figures.

But critics have warned the high land price policy would push up prices and rents for residential and office premises, which in turn would increase the cost of doing business in Hong Kong.

6. Tycoon hits new heights with property on The Peak
PEGGY SITO, SCMP 3 March 2004

Alan Chuang Shaw-swee is back in the spotlight after having bought a detached house on The Peak through open tender last week. He beat six local and overseas rivals to win PCCW's 5,750 square foot house for more than $140 million.

The house is on a site of 16,330 sq ft and has a plot ratio of 0.5.

Mr Chuang said the purchase was not related to his listed company but was made by his family. He is the major shareholder and chairman of property firm Chuang's Consortium International, which was active in corporate restructuring and fund-raising in the Hong Kong stock market in the 1990s.

In recent years, the company has shifted focus to cities in southern China, including Huiyang, Dongguan and Panyu.

A property broker said: "[Mr Chuang] is always interested in high-end properties even though he is not a very active player."

Last October, the Chuang family bought the former residence of the late tycoon Teddy Wang Teh-huei - a 3,660 sq ft house - for $56 million.

In 2002, Mr Chuang bought a detached house at 73 Plantation Road for $53 million.

A property consultant said Mr Chuang planned to redevelop two houses on the Middle Gap Road site, either for his own use or for investment purposes.