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1. 14 bid for $2b renewal project

2. K Wah floats North Point plan

3. Projects give Asia Standard $1b hope

4. Escalator plan may not move

1. 14 bid for $2b renewal project
Karen Chan, The Standard 16 April 2004

Fourteen local developers have submitted tenders for the HK$2 billion urban renewal project in Tsuen Wan, according to the developers and the Urban Renewal Authority.

The deadline for the 77,824 square foot site for residential and commercial development on Yeung Uk Road closed yesterday.

Cheung Kong (Holdings), Henderson Land Development, Wharf (Holdings), New World Development, Hang Lung Properties, K Wah International, Kerry Properties, China Overseas Land and Investment, Chinese Estates Holdings, Sino Land, Chinachem Group, New Asia Realty and Nan Fung Development have confirmed their bids.

Plans for the site include residential units covering 360,000 square feet and retail properties with a gross floor area of 53,000 sqft. Developers estimate the project would attract total investment of between HK$1.6 billion and HK$2 billion.

Market watchers said although the site is far from preferred locations in the centre of Hong Kong, such as Wan Chai and Mong Kok, developers would be attracted to the project because of a dearth of opportunities caused by the suspension of land sales from November 2002. Cheung Kong executive director Justin Chiu agreed but said that since the site is relatively small, it is unlikely to set a benchmark for the property market.

He said the real-estate market is consolidating with many end-users, developers and investors adopting a wait-and-see attitude after prices rose more than 20 per cent in the first quarter.

Chiu added that since the overall market sentiment has improved, he believes there are more development projects on the horizon.

He estimates that property prices could climb another 10 per cent by the end of the year.

K Wah Properties Investment (a subsidiary of K Wah International) managing director Alexander Lui said the Tsuen Wan site has potential because it is near the West Rail, and is surrounded by commercial complexes.

The government had originally marked the site as part of a project to enhance Tsuen Wan town centre - a project launched by the former Land Development Corporation.

Midland Realty director Ronald Cheung estimated that at an accommodation value of about HK$1,500 psf, the project would need some HK$700 million in land costs. He expects the total development cost for the project to be about HK$1.3 billion and work to start by the end of 2006.

Centaline Surveyors managing director Victor Lai estimated the cost for acquiring the site at about HK$900 million or an accommodation value of HK$1,800 psf. He said completed residential units are expected to fetch an average of HK$4,000 psf.

But the winner of the tender may pay less if profits from the property sales are split with the authority.

New World Development chairman Cheng Yu-tung said the property market is very stable and he expects property prices to grow by 10 to 15 per cent by year end.

``Speculators are not yet a concern for the property market,'' he said.

``There are few speculators and they are mainly concentrated in the luxury residential market.''

2. K Wah floats North Point plan
Jonathan Tam and Tina Kwok, The Standard 16 April 2004

Property developer K Wah International Holdings has proposed the government turn the former North Point Estate site into a centre of culture that would blend in with the West Kowloon cultural project and boost tourism.

``The government is studying our proposal. It fears the impact on the West Kowloon project, but in fact it will create synergy,'' chairman Lui Che-woo said.

The proposal came as the developer reported record property sales last year, which fuelled an 18 per cent jump in net profit despite earnings at its construction materials unit falling by about a third.

``It will be a waste if the prime site is redeveloped into a residential area mixed project [with public and private housing],'' Lui said.

The Housing Authority approved a proposal two years ago requiring any developer of the prime waterfront site to set aside a quarter of the floor area for public housing. Developers such as K Wah, Henderson Land Development and Sun Hung Kai Properties criticised the decision, saying it would cap the site's full potential value.

The site, valued at between HK$6 billion to HK$10 billion, has been vacant since the 43-year-old public estate was demolished more than a year ago.

K Wah proposes the site be divided into 12 projects including apartments, offices, shopping centres, hotels and other cultural facilities. It could cost up to HK$30 million assuming a total 150,000 square feet was developed at HK$2,000 psf.

Lui said K Wah would be interested in seven to eight projects but did not say what they were.

The revival of the property market propelled K Wah's 2003 net profit to HK$120.4 million, or 6.2 cents a share, from HK$102.3 million, or 5.4 cents a share, a year earlier.

Turnover jumped 44 per cent to HK$3.08 billion from HK$2.13 billion, due to the record properties sales of HK$1.9 billion. It proposed a final dividend of 2 cents a share, the same as last year.

With over HK$2 billion cash on hand from a bond sale and property sales, managing director Francis Lui said the company will need to replenish its land bank.

But, he said this year's earnings will not be affected despite fewer apartment sales because much of last year's sales have not been booked and property projects in Shanghai will also contribute. Lui said the pre-sale of the residential project in Zhabei district, Shanghai, will begin this year and is estimated to contribute HK$1 billion. Leasing of Grade A offices in Shanghai's K Wah Centre will begin in 2005.

K Wah's 67 per cent-owned unit K Wah Construction Materials said net profit dropped 35 per cent to HK$40.2 million, or 3.2 cents a share, last year, from HK$62.3 million, or 5.1 cents, in 2002. It proposed a final dividend of 1 cent, the same as the previous year.

It said margins suffered last year because of the sluggish economic conditions and the lack of large-scale infrastructure projects.

However, it remained upbeat about prospects, citing that the Olympic Games in Beijing in 2008, World Expo in Shanghai in 2010 and the economic recovery in Hong Kong will drive demand for construction materials.

3. Projects give Asia Standard $1b hope
Staff reporter, The Standard 16 April 2004

Mid-sized developer Asia Standard International is poised to reap about HK$1.16 billion from the sale of two residential projects in Aberdeen and Yau Tong this year.

Chairman Clement Fung said the company expects to receive revised land premium offers for the two projects from the government. The land premiums will be paid for changing the site usage of the two projects from industrial to residential.

``Once the land premiums are settled, we will launch the two projects this year at an average price of about HK$3,500 per square foot,'' Fung said.

The company expects to cash in HK$634 million from the sale of the Yau Tong project, which could generate a total gross floor area of about 181,000 sq ft.

The Aberdeen project, which could provide a gross floor area of 151,000 sq ft, is expected to fetch HK$529 million.

Fung said the company's land bank was adequate ``for future development in the coming three years''.

Projects on the drawing board include four residential developments in Yuen Long, Sai Kung and other areas in the New Territories.

The company also owns 450,000 sq ft of office-retail floor area, which generates an annual rental income of HK$70 million. Rents may be raised when tenancy agreements are renewed, Fung said.

Earlier this month, the locally-listed developer and its partner, British fund Grosvenor, sold the entire block of Grosvenor Place, at 117 Repulse Bay Road, for about HK$940 million or HK$15,600 psf.

The project provided a profit margin of nearly 90 per cent, based on the total investment costs of HK$8,300 psf, including land costs of HK$5,300 psf.

Profit from the sale of Grosvenor Place is expected to be booked in Asia Standard's 2004-2005 fiscal year.

Shares of Asia Standard closed unchanged at HK$0.38 yesterday.

4. Escalator plan may not move
BENJAMIN WONG, SCMP 16 April 2004

A second Mid-Levels escalator is unlikely to be built this decade, and might never get off the ground, according to transport planners.

Escalators in one of the stations on the MTR's proposed West and South Island line might render unnecessary the lower part of the proposed escalator, between Third Street and Queens Road West, the planners told the Central and Western District Council yesterday.

A Transport Department study showed the $150 million project's first phase, linking Centre Street with Bonham Road, was feasible.

The department's senior engineer, Luk Wing-cheong, said the MTR could build passenger exits and escalators near either King George V Memorial Park or Bonham Road, rendering the outdoor escalator unnecessary.

Planning work for the escalator link could not continue until the MTR's plans were finalised, the engineer said.

Mr Luk said it would be difficult to proceed with the first phase of the escalator link on its own, since it would be hard to secure funding because of the government's budget deficit. "We need to consider all our projects and allocate resources according to our priorities," he told councillors.

Mr Luk said bigger projects would get funding more easily.

Although no timetable had been set for the MTR line, the aim was to build it before 2010.

Councillors were disappointed there was still no time frame for building the escalator link after years of planning.