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1. Offers under $300m aim to win Peak site

2. Wedding Card St invitation declined

3. Leading developers avoid Skyhigh tender

1. Offers under $300m aim to win Peak site
Raymond Wang, The Standard 24 March 2004

Chinese Estates Holdings, Sino Land and Nan Fung Development have submitted their respective bids for a luxury residential site on The Peak through a private tender that ended yesterday.

The offering prices of the three mid-sized developers for the 10 Pollock's Path site are less than HK$300 million, sources said.

Spokesmen for both Chinese Estates and Sino Land confirmed their bids but would not reveal their offer prices. Nan Fung could not be reached for comment last night.

Sales agent Raymond Ho & Co director Raymond Ho said the tender was well received when it closed. However, he declined to disclose details.

The 43,824-square-foot site can be developed into several detached houses with a plot ratio of 0.5 times.

Sino Land bought a luxury residential site at 53 Conduit Road in Mid-Levels last month for more than HK$250 million.

Joseph Lau's Chinese Estates has been anxious to buy luxury properties recently. It tried but failed three times to draw The Peak plot at 12 Mount Kellett Road from the government reserve list last month.

In a sign of growing confidence in the residential property market, Chinese Estates and Sino Land were two of 32 developers this month who submitted expressions of interest for the Urban Renewal Authority's Johnston Road and Tsuen Wan redevelopment projects.

Market analysts expect developers to resort to other means to replenish their land banks, such as private tenders and negotiations, after the government insisted on keeping prices close to market level, thus withholding land lots for auction from the reserve list.

As land supply is limited, the luxury home market has been particularly active in recent months.

The luxury residential sector is expected to outstrip the mass residential market, with prices surging by 60 per cent over the next two years, Credit Suisse First Boston (CSFB) has predicted. So far, residential property prices have risen on an average of more than 30 per cent since last year's Sars outbreak.

But that is skewed towards the upmarket segment, whereas the low end of the mass market has risen only in the low teens, CSFB Asian Equities Research director Victor Kwok said in a recent property report.

CSFB predicted mass residential prices would rise 30 to 45 per cent over the next two years.

``So far, we observe an increasing divergence in pricing between luxury and mass residential assets - where values of properties on The Peak are perhaps only some 20 per cent from their peak in 1997, whereas those of the low-end properties are still languishing at some two-thirds of their previous highs,'' Kwok said. ``The hope is, therefore, that a spillover effect from the upper end will flow gradually down to the middle and then lower segments.''

This is because demand for upmarket projects is driven more by developers and investors, as confidence - political and socio-economic - and alternative investment opportunities are key influential factors. However, the mass market remains driven mainly by the basic considerations of employment prospects and wage growth, which tend to lag, the report said.

The ultimate question is whether upmarket residential property prices can continue to go up, and whether the low-end segment can also enjoy such bubble-like price increases, it said.

2. Wedding Card St invitation declined
CHLOE LAI, SCMP 24 March 2004

Wedding Card Street 'a remnant of the 1960s'. Picture by Martin Chan

Most residents and shop owners on Wan Chai's Wedding Card Street have refused to sell their property for redevelopment to the Urban Renewal Authority.

With less than 24 hours left for residents to reply to the authority's offer, only 39 per cent of the 647 affected owners have agreed to sell their properties.

The authority has no breakdown on how many of those who have accepted are residents, business operators or landlords. It admitted that its buyout of Wedding Card Street - properly known as Lee Tung Street - posed "a very difficult situation for the authority".

But an authority spokesman said it was not the project with the lowest response rate. He said the authority would continue discussions with residents and shop owners but it would be useless to keep talking with those who repeatedly rejected their offers.

If the shop owners ultimately do not agree to move, the URA can apply for the compulsory resumption of their properties.

The authority offers owners compensation which is the equivalent of a seven-year-old flat in the district, which would equate to $4,079 per square foot in Wan Chai.

The Wan Chai District Council asked the authority to extend the deadline and continue negotiations with all affected people, but the request was rejected.

Wan Chai district councillor Mary Ann King Pui-wai, whose constituency includes Wedding Card Street, said she would like to see the street preserved.

The demolition of Wedding Card Street is part of a $3.58 billion project to transform an ageing part of Wan Chai into a leisure, shopping, residential and commercial precinct. But the project met with strong opposition from many residents, shop owners, architects, planners and district politicians.

They said it was pointless to bulldoze a busy and well-maintained corner of Wan Chai and build another commercial and shopping district with no character. Some have also accused the authority of failing to offer adequate compensation and have formed a concern group, which has petitioned district councillors and filed a complaint to the Legislative Council.

Chin Kam-piu, a shop owner and a core member of the concern group, said: "We are happily doing business here. The authority comes in and says they want to redevelop this place. Whether we like it or not, we have to move."

The group wants the authority to give everyone the option to accept compensation or be allowed to stay in the area, either in the new development or preserved sections of the street. It has also demanded a flat-for-flat and shop-for-shop compensation approach similar to two other authority redevelopments in Wan Chai.

Ms King said: "It is one of the few remaining streets of the 1960s. This is a very unique street and it has witnessed the changes of Hong Kong in the past decades. It is our cultural identity.

"The authority can't build cultural identity with billions of dollars. It comes from the people and with the passage of time."

3. Leading developers avoid Skyhigh tender
ERNEST KONG and NICHOLE CHAN, SCMP 24 March 2004

The tender for the former Skyhigh site on the Peak has received a tepid response from the leading developers.

A source close to the deal said a "substantial number" of bids were submitted for the Peak's highest residential plot.

But he said most were from individual investors and small-scale developers.

Among big property names, only Sino Land and Chinese Estates Holdings had confirmed submissions yesterday, when bids closed.

Sun Hung Kai Properties, Wharf (Holdings), Swire Properties, PCCW, and Kowloon Development said they did not bid on the site.

Cheung Kong (Holdings), Hang Lung Properties and New World Development did not respond to queries on the sale yesterday.

A banking source described the market response as "lukewarm", implying that the bids had not reached the reserve price.

The 43,824-square foot site at 10 Pollock's Path has been owned by former Hong Kong Bank chairman Michael Sandberg and Yaohan International boss Kazuo Wada.

It was bought in 1996 for $375 million by Pearl Oriental Holdings, which demolished a 19,773 sq ft luxury house on the site, but failed to develop it after property prices plunged during the Asian financial crisis. It then fell into the hands of its creditor, Bank of East Asia, in 2001, and was acquired soon afterwards by Bank of China.

Current owner Citigroup bought the site from Bank of China in an auction of non-performing assets last year.

With the luxury property market rebounding, some expected the Skyhigh site to fetch top dollar.

Landscope Realty managing director Koh Keng-shing estimated that the property, which has a plot ratio of 0.5, could net as much as $400 million, or $18,000 per square foot.

He estimated building costs for an appropriate structure on the site at $4,000 per square foot.

However, analysts said major developers were not keen on the site due to the relatively small potential of the project.

Adrian Ngan, an analyst at BNP Paribas, said most of the leading developers would find the profit too small, even if the completed project could be sold at $30,000 per square foot.

"Even if the developer earns $8,000 per square foot, it can only earn about $170 million," Mr Ngan said.

"Moreover, most developers don't want to set a high price indication for the coming government land sale."