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1. CII-HK Research Study of Feasibility of Establishing Construction Standards for Hong Kong

2. Construction output for fourth quarter and whole year of 2003

3. Government to declare Morrison Building a monument

4. Downturn in building projects continues

5. The battle to oust Green Island

6. Harbour row redress may total $100m

7. Developers to build luxury flats on estate they bought for knock-down price

8. Morrison Building to be declared official monument

9. Harbour delays ‘have cost up to $100m’

1. CII-HK Research Study of Feasibility of Establishing Construction Standards for Hong Kong
CII-HK Press Release, 19 March 2004

The Construction Industry Institute (Hong Kong (CII-HK) has launched it research study on the subject of construction standards in Hong Kong. The study is the third major study project undertaken by the CII-HK, following the study on partnering practices (which has just been completed and the full report of which is expected to be put to print in April) and the study on environmentally healthy buildings (which is scheduled for completion in September). The study is commissioned to the Research Team of the City University of Hong Kong. Study work has commenced in January and is expected to take twelve months. A special task force, headed by Mr Michael Arnold and comprising representatives from CII-HK’s member companies, covering a wide spectrum of industry sectors, has also been set up within CII-HK to monitor and oversee the research study.

2. To signify the importance of the research project and to kick start major activities of the study, a signing ceremony in respect of the research agreement is scheduled for 1 April 2004 (Thursday) at 4:00 pm at the City Unviersity. The CII-HK will be represented by task force Chairman Mr Michael Arnold. Professor SC Roderick Wong, Dean of the Faculty of Science and Engineering will represent the City University of Hong Kong.

3. The purpose of the research study is to examine the feasibility of establishing construction standards for Hong Kong. The study will look at the needs and the problems of the Hong Kong construction industry with regard to construction standards, taking into account Hong Kong’s unique economic positioning in relation to the Mainland China, the UK, other European countries, the USA and countries in the South Eastern Pacific region. It will look at the possible direction and will explore the possible way forward, which will have to be practical and economical for the industry, in the face of amongst other problems multiplicity of standards.

4. For the study to be on the proper track and to ensure that the real need of the industry is gauged, the Research Team has considered it of paramount importance to seek the views of practicing people from within the industry. For this, the Research Team is organizing a focused group workshop on 30 March 2004 (Tuesday) afternoon from 2:00 pm to 5:30 pm at the City University of Hong Kong. The workshop is targeting a selected representative group (of about 30 to 35) of senior executives in the industry and senior Government officials. Researchers from Beijing, Singapore, Australia, the USA and Hong Kong will introduce standardization practices in different countries and regions and help facilitate participants’ discussion to identify local problems. Based on the findings and results of the workshop, the Research Team will follow up with more focused in-depth interviews. Additional workshop will also be arranged if considered necessary. The outcome of this exercise will form the basis of further study in the next phase. Both the CII-HK and the Research Team are therefore attaching the greatest importance to this very phase of research work.

2. Construction output for fourth quarter and whole year of 2003
Hong Kong Government, 18 March 2004

1. In 2003, the total gross value of construction work performed by main contractors decreased by 6.7% in nominal terms compared with 2002 to $98.9 billion, according to the preliminary results of the Quarterly Survey of Construction Output released today (March 18) by the Census and Statistics Department.

2. After discounting price changes, the total gross value of construction work performed by main contractors decreased by 2.4% in real terms over the same period.

3. Gross value of construction work in real terms is derived by deflating the corresponding nominal value with an appropriate price index to the 2000 price level.

4. Analysed by type of construction work, the gross value of construction work performed at private sector sites totalled $35.1 billion in 2003, representing a decrease of 17.0% in nominal terms from 2002. In real terms, it decreased by 10.4%. The decrease was mainly due to completion of work at some large residential building sites.

5. On the other hand, the gross value of construction work performed at public sector sites amounted to $32.4 billion in 2003, representing a slight increase of 0.9% in nominal terms over 2002. In real terms, it rose by 4.7%. The increase was mainly attributable to an intensification of work on some public service building projects.

6. The gross value of construction work performed by contractors at locations other than construction sites amounted to $31.5 billion in 2003, representing a slight decrease of 0.6% in nominal terms compared with 2002. Yet, it increased by 1.0% in real terms. Construction work at locations other than construction sites includes minor new construction activities and renovation work at erected buildings and structures; and electrical and mechanical fitting work at locations other than construction sites.

7. Analysed by end-use category, residential building projects accounted for the largest share in the gross value of construction work performed at construction sites in 2003. The gross value of construction work performed for these projects amounted to $28.5 billion, representing a decrease of 21.9% in nominal terms compared with 2002.

8. Transport projects constituted the second largest category of construction site work. The gross value of construction work performed for these projects totalled $14.1 billion in 2003, representing an increase of 4.9% in nominal terms over 2002.

9. Industrial, storage and service building projects represented the third largest category of construction site work. The gross value of construction work performed for these projects was $10.2 billion in 2003, representing an increase of 35.6% in nominal terms over 2002.

10. Comparing the fourth quarter of 2003 with the fourth quarter of 2002, the gross value of construction work performed by main contractors decreased by 9.0% in nominal terms. In real terms, the decrease was 5.7%.

11. Within this total, the gross value of construction work performed at private sector sites decreased by 23.7% in nominal terms in the fourth quarter of 2003 from a year earlier. Yet, the gross value of construction work performed at public sector sites increased by 1.8%. The gross value of construction work performed by contractors at locations other than construction sites increased marginally by 0.1%.

12. In real terms, the gross value of construction work performed at private sector sites decreased by 17.7% in the fourth quarter of 2003 from a year earlier. For public sector sites, the gross value of construction work increased by 5.3%. The gross value of construction work performed by contractors at locations other than construction sites decreased slightly by 0.5%.

13. On a seasonally adjusted basis, the gross value of construction work performed by main contractors decreased by 10.3% in nominal terms or 9.4% in real terms in the fourth quarter of 2003 compared with the third quarter of 2003.

14. Table 1 (text version) and 2 (text version) show the gross value of construction work performed by main contractors in the fourth quarter and the whole year of 2003 respectively. Table 3 (text version) shows the revised figures for the third quarter of 2003.

15. Owing to the widespread sub-contracting practices in the construction industry, a construction establishment can be a main contractor for one contract and a sub-contractor for another contract at the same time. The gross value of construction work performed by main contractors covers only those projects in which the construction establishment takes the role of a main contractor, but not projects in which it takes only the role of a sub-contractor. However, sub-contractors' contribution to projects should have been included in the gross value of construction work performed by main contractors for whom they worked.

16. More detailed statistics are given in the "Report on the Quarterly Survey of Construction Output, 4th Quarter 2003". The report is now available, in both hardcopy and softcopy (in PDF format), for sale at HK$12. It can be purchased online at the "Statistical Bookstore, Hong Kong" (http://www.statisticalbookstore.gov.hk). For purchase of hardcopy, this can be done through mail order by returning a completed order form which can be downloaded from the C&SD's website (http://www.info.gov.hk/censtatd/eng/prod_serv/forms_index.html). Purchase can also be made in person at the Publications Unit of the C&SD (Address: 19/F, Wanchai Tower, 12 Harbour Road, Wan Chai; Tel.: 2582 3025).

17. For enquiries about the survey results, please contact the Construction and Miscellaneous Services Statistics Section of the Census and Statistics Department at telephone no. 2805 6426 or email building@censtatd.gov.hk.

3. Government to declare Morrison Building a monument
Hong Kong Government, 18 March 2004

The Secretary for Home Affairs, Dr Patrick Ho, is initiating procedures to declare the Morrison Building at Hoh Fuk Tong Centre in Tuen Mun a monument under the Antiquities and Monuments Ordinance.

This follows a recent decision by the Chief Executive in Council to dismiss the objection lodged by the owner of the building.

The Morrison Building was originally part of a villa built in 1936 by General Cai Tingjie (1892-1968), who led the Nineteenth Corps against the Japanese invasion. From 1946 to 1949, it was turned into the Dade Institute - a tertiary education institution founded under the directive of Chinese leaders Zhou Enlai and Dong Biwu. Many eminent Chinese scholars of the time lectured at the institute, nurturing a group of bright young intellectuals. The building bears witness to the unique role played by Hong Kong in the history of modern China and the establishment of the People's Republic of China.

The Government has been in discussions with the owner since June 2001 after learning of the owner's intention to redevelop the site in the hope that a mutually beneficial agreement that could protect the building as well as enable the owner to carry out any development proposal could be reached. However, no agreement was reached and the owner went ahead to apply for a demolition permit on March 1, 2003.

The building was declared a Proposed Monument on April 11, 2003, a move that protects it for 12 months against the owner's demolition plan. The declaration of a Proposed Monument is not renewable on private land.

On October 31, 2003, the Secretary for Home Affairs, in his capacity as the "Antiquities Authority" and on the advice of the Antiquities Advisory Board, served on the owner a notice of his intention to declare the building a monument for permanent protection. The owner then raised an objection to the Chief Executive.

"This is the first time that a privately owned building to be declared a monument under the ordinance without the consent of the owner," a Government spokesman said.

The area to be declared is about 1,250 square metres, comprising an area of about 480 square metres occupied by the building and a peripheral area of about 770 square metres, which provides access to the building from the outside of the Hoh Fuk Tong site.

The declaration will not affect property ownership. The owner has stated its intention to redevelop the Ho Fuk Tong site.

The Government spokesman said that because the area to be declared occupied only a small portion of the intended redevelopment area, the declaration should not prevent redevelopment in that area altogether.

"The Government will continue to maintain dialogue with the owner and render assistance as appropriate," the spokesman said. "The Government has also offered to bear the restoration and maintenance costs of the building after the declaration, provided that it will be open for public visits. There is also provision for the owner to seek compensation under the ordinance.

"The Government is committed to protecting important historical buildings," he said.

4. Downturn in building projects continues
Danny Chung, The Standard 19 March 2004

Output in the construction industry for 2003 continued its downward trend with a 6.7 per cent slide to HK$98.8 billion, according to government statistics released yesterday.

The industry has recorded a drop in output of about 6 per cent on average every year since 1999.

In the 1990s, starting in 1993, the industry achieved growth of about 14 per cent on average each year ending in 1997 and thereafter dropping to only 1.4 per cent growth in 1998.

According to the Census and Statistics Department, total output in the private sector for 2003 was HK$35.1 billion, a fall of 17 per cent over 2002, after two years of rises in private sector construction.

The department said this ``was mainly due to completion of work at some large residential building sites''.

However, public sector construction in 2003 continued to hold steady with a slight increase of 0.9 per cent to HK$32.4 billion over 2002 and was ``mainly attributable to an intensification of work on some public service building projects''.

These include large road projects such as the Deep Bay Link, Route 9, the Hong Kong-Shenzhen Western Corridor and widening of Yuen Long Highway for the Highways Department, as well as the second stage of reclamation at Penny's Bay for the Civil Engineering Department.

These projects helped offset the decline in workload following the completion of the Kowloon-Canton Railway Corporation's West Rail and soon to be completed Ma On Shan rail link.

Minor work, renovations and building services work recorded a slight increase of 0.6 per cent to HK$31.5 billion over 2002.

Residential building work continued to be the largest sector with HK$28.5 billion of work completed, but this was down 21.2 per cent over the year before.

Transport projects came second at HK$14.1 billion, representing a small increase of 4.9 per cent, while industrial, storage and service buildings came third at HK$10.2 billion, a jump of 35.6 per cent.

5. The battle to oust Green Island
Danny Chung, The Standard 19 March 2004

Seashore residents of the gentrifying Hung Hom area, locked in a squabble with a decades-old cement plant, say they are fed up with what they call the government's poor town planning and lack of a definitive harbour policy.

At the centre of the affair is Green Island Cement, a unit of Cheung Kong Infrastructure. Residents say they have been complaining for 11 years that the company has poured out dust and noise pollution from its Hung Hom pier site.

Over that period, the area has steadily moved upscale from its original industrial character to appeal to high-income earners.

According to a wide variety of critics, who see the entire development of Hong Kong's harbour as a badly planned affair, the government has botched the situation.

Certainly, there seems to be some confusion on the government's part. The Environmental Protection Department says the plant is doing what its licence says it can do. The Lands Department earlier said the plant had violated the terms of its lease and sought to kick Green Island off the site.

Green Island subsequently sued, contesting the Lands Department's grounds that it had breached the lease conditions, and demanded compensation for losses incurred.

The Office of the Ombudsman has investigated the case and found what it called maladministration on the Lands Department's part.

The story began in 1978, when the government leased the pier and the adjoining industrial site to Green Island Cement for industrial use for 70 years, until 2048.

Green Island set up a batching plant to mix cement with water and aggregate to make concrete. It was an attractive site because barges had a water route to bring in the massive supplies of material needed to make the vast amounts of concrete needed for Hong Kong's burgeoning residential construction.

China Light and Power and Cheung Kong Holdings, the property company controlled by tycoon Li Ka-shing, developed Laguna Verde. The residential site is cheek by jowl with Green Island Cement, which is owned by Cheung Kong Infrastructure, which is also controlled by Li Ka-shing.

Prompted by the Laguna Verde residents' continuing protests, the Lands Department has accused the batching plant of being an illegal development. It alleges the plant's operations have overflowed onto the pier, violating the terms of its lease.

Although the batching plant and the pier have been there for several decades, the area has clearly outlived its usefulness as an industrial site.

``You have to understand that this lease was made years ago, and at that time nobody thought this area would be developed to this extent,'' says district councillor Siu Yuen-sheung, in whose constituency the cement factory lies. Her constituents, she says, complain incessantly about dust and noise. ``When they open the windows, a lot of dust flies in. And when they sweep the floor, there is a layer of dust.''

Neither Green Island Cement nor Cheung Kong Infrastructure responded to requests for an interview.

However, Cheung Kong Infrastructure officials, at a chance meeting with Siu, said they would move the plant if the government could find another location for them.

``You think we don't want to go? They said to us that the government cannot find land,'' Siu quotes the officials as saying.

It isn't as easy as it sounds. Siu says Green Island wants land in a city area, near the sea for easy transport of raw materials, and close to customers. Concrete starts to harden in about two hours, so locations on the outer islands are unworkable.

Hung Hom residents charge that the government is sitting on the issue. Laguna Verde residents are amongst the most vocal.

``It's a beautiful place and the facilities are very good, and the management is very good. It's just that it's not very attractive if you live over there,'' says Helen Maffini, a Laguna Verde resident. One family she knows has decamped for the Peninsula Royal development because of the dust and noise, she says.

Kelvin Chan, a real estate agent with an office nearby, says noise and dust have affected flat prices.

``For phase 3 and 4, with a sea view, prices are discounted by 10 to 15 per cent,'' Chan said. ``People have moved away because of it, but it isn't the case of only finding out after buying, they knew it was there before buying.''

Siu says a series of meetings between Green Island Cement and the Environmental Protection Department (EDP) to discuss the complaints and mitigation measures have resulted in no action.

"EDP is always putting in a good word for them,'' she says. "I don't know what it is with EDP, always saying `no, no, they're operating just fine, we cannot give you an answer'.''

The department has released results from three monitoring stations saying that the batching plant does not exceed environmental department pollution levels.

In addition, Siu says, Green Island has been extremely accommodating about the complaints and has carried out measures like spraying down the aggregate with water and delaying opening times to mitigate dust and noise.

Siu says the EDP has renewed Green Island's permit to operate the plant for another five years.

``I don't know how it was approved in the past,'' she complains. ``In 2001, our documents said we already were unhappy and asked them to move. But in 2002, they suddenly approved five more years for them . At the time I was furious, so furious that I thumped the table.''

The Environmental Planning Department says Green Island doesn't need an environmental permit to operate because its silo capacity doesn't exceed 10,000 tonnes. Below that capacity, batching plants only require a specified process licence.

The Environmental Planning Department said all the paperwork is in order although Michael Suen, the secretary for housing, planning and lands, said the Lands Department issued warning letters as long ago as 1992 ``requesting compliance with the lease conditions'' because the batching plant had spilled on to the pier.

Other observers are more conciliatory.

Raymong Wong, the chief town planner at the Town Planning Board, simply points out that economic change and technological advances have been a factor in changing uses of the waterfront.

And so the squabble goes on.

6. Harbour row redress may total $100m
Teddy Ng, The Standard 19 March 2004

Contractors working on phase three of the Central reclamation project will be eligible for a maximum HK$100 million in compensation for the five-month delay caused by a long court battle over the scheme.

However, Territory Development Department director John Chai said yesterday that it will not be necessary to seek extra funding from the Legislative Council to pay for any compensation.

Chai said that while the planned 55-month project was delayed for five months by a filing for a judicial review brought by the Society for the Protection of the Harbour, dredging and other preparatory works continued.

Chai said the government is talking to the contractors, a Leighton-China State-Van Oord joint venture, urging them to resume work as soon as possible.

They have been informed by letter of the March 9 Court of First Instance ruling that the project is legal and can proceed.

The department's Hong Kong Island and Islands development office project manager Cheung Tai-yan said

the government is considering asking the contractor to speed up construction. Cheung said the contractors had not asked for compensation.

However, the estimated maximum compensation the government would be liable for would be HK$100 million and the government would negotiate to lower that. ``According to the contract, the contractor has the responsibility to reduce the loss and risk,'' Cheung said.

Meanwhile, Chai said the reclamation will not be stopped again even if the Society for the Protection of the Harbour launches an appeal.

Former society chairman Winston Chu told MetroNews on Wednesday that unless thousands of people join hands along the waterline between Central and Wan Chai and show ``genuine'' and ``enthusiastic'' support, the society will not appeal.

Chai said: ``I think the reclamation is legal and reasonable. Making an appeal will not affect the legality of the project.''

He reiterated that the project's planned area of 18 hectares is the minimum required for the Central-Wan Chai bypass, the waterfront promenade and new ferry piers. The government originally planned a 32-hectare reclamation.

Meanwhile, Chai said the Territory Development Department and the Civil Engineering Development Department will merge in mid 2004.

The Territory Development Department New Territories West and North development offices would also be merged under the exercise.

In the merger, 66 posts have been earmarked for deletion, of which nine are directorate posts.

Three of these directorate posts are from the Territory Development Department.

However, Chai said the merger will not lead to lay-offs or redundancies.

It is estimated that the merger will save the government HK$40 million annually.

7. Developers to build luxury flats on estate they bought for knock-down price
DENISE TSANG, SCMP 19 March 2004

The controversial Hunghom Peninsula housing estate will be torn down and replaced with luxury apartments - at a total cost of about $5 billion, the developers announced yesterday.

New World Development managing director Henry Cheng Kar-shun said its unit NWS Holdings and Sun Hung Kai Properties would demolish the waterfront estate and build flats over a gross floor area of 1.55 million sq ft.

The project looks to be a windfall for the developers, with total costs estimated at $3,225 per sq ft and the luxury units likely to sell for about $10,000 per sq ft.

The developers bought the project back from the government last month for $2.77 billion, or $1,800 per sq ft, including a land premium of $864 million.

Lawmakers attacked the price for being too low and accused the administration of favouring big developers with the deal.

Mr Cheng expected the redevelopment to take four years to complete. "We are hiring an architect to work out a detailed plan and will then discuss it with the government," he said.

Built under the now-defunct Private Sector Participation Scheme (PSPS), Hunghom Peninsula has 2,470 flats and overlooks Victoria Harbour.

It was one of two completed PSPS projects left in limbo when the government suspended the sale of government-subsidised housing in November 2002 to prop up the private housing sector.

The other is the 2,010-unit Kingsford Terrace, jointly owned by NWS, its parent New World Development and privately run Chow Tai Fook Enterprises. Chow Tai Fook is New World Development's controlling shareholder.

Mr Cheng said the $5 billion development cost included the $864 million land premium, $1.9 billion in debts and demolition and construction costs. This means a cost of $3,225 per sq ft.

He said the developers were seeking a profit margin of 20 to 30 per cent.

Mr Cheng believed the redevelopment would not require a further land premium, contrary to the view of Secretary for Housing, Planning and Lands Michael Suen Ming-yeung, who last month said developers would have to renegotiate the premium if they changed the floor plan of the project.

Centaline Surveyors managing director Victor Lai Kin-fai estimated the redeveloped flats could be sold comfortably at about $10,000 per sq ft, primarily due to their spectacular sea view.

8. Morrison Building to be declared official monument
MARTIN WONG, SCMP 19 March 2004

The 70-year-old Morrison Building in Tuen Mun is to be declared an official monument, the first time such a move has been taken without the owner's consent.

Secretary for Home Affairs Patrick Ho Chi-ping is initiating the procedures, a government statement said.

"This follows a recent decision by the chief executive in council to dismiss the objection lodged by the owner of the building," it added.

The Church of Christ in China owns the building at the Hoh Fuk Tong Centre in Tuen Mun, as well as the surrounding site.

A government spokesman said last night: "The declaration should not prevent redevelopment in that area."

This means only the 480 square metres of land occupied by the building is protected, but the owner is free to redevelop more than 30,000 square metres in the surrounding areas. The church will be compensated but the amount is still being negotiated.

The Morrison Building was originally part of a villa built in 1936 by Nationalist general Cai Tingjie, who led the famed Nineteenth Corps against the Japanese.

Between 1946 and 1949, it was turned into the Dade Institute, a tertiary educational institution founded under the directive of Zhou Enlai, China's first premier.

"The building bears witness to the unique role played by Hong Kong in the history of modern China and the establishment of the People's Republic of China," the statement said.

The building is now used as a religious centre by the church after the London Missionary Society formally transferred its ownership of the site in 1961 for one dollar.

Learning of the owner's intention to redevelop the site in 2001, the government held talks with the church in the hope that an agreement to protect the building, as well as enable the redevelopment project, could be reached.

Last April, the building was declared a Proposed Monument, which was meant to protect the building for 12 months against the owner's demolition plans.

In October, Dr Ho told the owner that the government wanted to declare the building under permanent protection, but the owner lodged an objection.

A government spokesman said that declaring the building a monument for permanent protection would not affect property ownership.

9. Harbour delays ‘have cost up to $100m’
CHEUNG CHI-FAI and ALEX LO, SCMP 19 March 2004

Delays to the Central reclamation caused by a series of legal challenges will cost the government up to $100 million in fees to the contractor, a senior official said yesterday.

Director of the Territory Development Department John Chai Sung-veng said the project had been delayed by five months since a judicial review was launched by the Society for Protection of the Harbour. But the High Court ruled last week the government could proceed with the controversial project, which involves filling in about 18 hectares of the harbour.

"We haven't received any claim from the contractor but this is inevitable [because of the delays]," Mr Chai said.

He said losses of up to $100 million had probably been incurred by the contractor, a joint venture between China State Construction Engineering and Leighton Contractors.

Most of the losses were due to extra wages, equipment rental and procurement payments already incurred or requested before the suspension of the core reclamation works.

Mr Chai said the estimate had not taken into account efforts by the contractors to minimise losses during the period. "It is the contractual responsibility for the contractor to take measures to minimise losses in case of uncertainty over the project," he said.

He said there was no need at the moment to ask for extra funding from the legislature in the face of possible claims from the contractor. The whole project will cost about $3.8 billion.

Government lawyers at an injunction hearing at the High Court last October had warned of losses of almost $600 million if the project was terminated.

To speed up the reclamation, the department is now working with the contractor to draw up a new schedule for the project. Mr Chai said the work would continue even if a final appeal against the project were lodged by the society.

"We believe that the legality of the work will not be overthrown even if the case is brought to the Court of Final Appeal," he said.

The society wrote to the Executive Council this week warning it was preparing to take its case to the Court of Final Appeal and that in the meantime, the government should suspend all reclamation works off Central.

The Housing, Planning and Lands Bureau said reclamation work would proceed even though Department of Justice lawyers were studying the society's letter. "In fact, the contractor has resumed work since last week, after the High Court ruling," a spokesman said.

Meanwhile, the society's former chairman, Winston Chu Ka-sun, denied there was a rift between him and current chairwoman Christine Loh Kung-wai over whether an appeal should be launched.

"We both agree a final legal challenge should only be launched if there are both legal grounds and widespread public support - both factors are important," he said.

He said the level of public support may be gauged from the turnout on Sunday at a protest in which a human chain will be formed from Queen's Pier along the harbour front. Ms Loh had said on Wednesday that the turnout would not be a factor in deciding whether to launch the appeal.