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1. Cheung Kong land bank flush

1. Cheung Kong land bank flush
ERNEST KONG , SCMP 1 April 2005

Cheung Kong (Holdings) has enough land to keep it busy for up to six years, the company says.

Moreover, analysts say, Cheung Kong remains in a buying mood despite dwindling profit margins at new projects.

Deputy chairman Victor Li Tzai-kuoi said Cheung Kong and associate Hutchison Whampoa had acquired more than 50 million square feet of land - double some market estimates.

"There are some misinterpretations of our land bank," said Mr Li yesterday. The firm had assumed a plot ratio of one for its agricultural land bank, which might have resulted in estimates that were too low, he added.

According to Mr Li, the company's land bank includes 20 million sq ft of projects under development, 11 million sq ft of agricultural land, five million sq ft of sites under active planning and six million sq ft of properties that have been leased out.

It also includes one million sq ft of properties managed by its Singapore-listed Fortune Reit and 13 million sq ft of land held by Hutchison Whampoa.

Despite slower first-quarter sales, Mr Li said the company would sell as much property this year as it had done in the past.

Recent interest-rate rises would not deter residential buyers, he said.

"Property sales should not be looked at on a quarter-by-quarter basis. Every year, we sell around 4,000 to 4,500 units."

"In addition, we have turnover from our reits [real estate investment trusts]," said Mr Li, who would not give a timetable for a possible secondary listing in Hong Kong of the Singapore-listed Fortune Reit.

Cheung Kong said property sales this year would mainly come from residential units at the Pacifica in Cheung Sha Wan and Carmel Cove, a new block in its Caribbean Coast development in Tung Chung, and a few projects in the mainland.

Analysts have expressed concerns about the developer's recent land-buying spree.

"The size of its land bank has no effect on its balance sheet; what's important is the acquisition cost," said BNP Peregrine Paribas regional property analyst Adrian Ngan Wai-hung.

Earlier this month, Cheung Kong and Hutchison Whampoa jointly paid $880 million for a property division of Citic Pacific, which owns several residential sites in Yuen Long totalling 175,367 sq ft.

In January, Cheung Kong beat 10 other developers to win the right to build the first phase of MTR Corp's Dreamcity residential project in Tseung Kwan O.