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1. Legco anger at decision to delay Tamar work

2. Cheung Kong wins police site project

3. 'Give Tamar back to the people'

4. Marine police HQ to be turned into a 'heritage hotel'

5. Reclamation schemes put on hold

6. Lawmakers given vow on new building

7. Tamar contractors protest over decision

8. The Government's New Home Is Not The Only Project Put On Hold . . .

9. Tamar site: the makings of an urban renaissance?

10. Pearl Delta hailed as rising global star

11. SHKP close to striking deal to take development private

12. Young towns feel brunt of excess

1. Legco anger at decision to delay Tamar work
Cannix Yau, The Standard 28 May 2003

The Legislative Council Commission has complained that it was not consulted about the postponement of plans to build the new government complex at Tamar, which was to include a new Legco building.

Chairwoman Rita Fan said the commission ``expresses regret that the government reached this decision without consulting the commission''.

The HK$4.7 billion project at Admiralty has been put on hold for six months while the government reviews its spending plans.
Fan said she hoped there would be a new Legco building by 2008 because facilities in the existing building were insufficient.

She said there was seating in the chamber for only 60 legislators, which would not be enough if the number was increased in the constitutional review due in 2007. There was also a shortage of conference rooms and some offices had to be located outside the building because of a lack of space, she added.

``The commission hopes that by 2008, when the fourth Legislative Council begins, it will have a new Legco building. It doesn't matter if the building is separate from the government headquarters,'' she said.

She quoted the government as saying that even if the project was postponed for six months, it could still be finished by 2008. But if the plan was put on hold for more than six months, the commission would call on the government to offer alternative sites for the new Legco building, Fan said.

Director of Administration Andrew Wong said the government did not have any plans for an alternative site. The Legco building accounts for HK$800 million of the HK$4.7 billion Tamar project.

Frontier legislator Emily Lau said the government's change of heart would damage its reputation.

``The government's fickle manner in handling the plans makes people think that it is shifting its position very often, affecting its reputation for governance,'' she said, noting that the government had applied to the Finance Committee for the funding.

Executive Councillor Jasper Tsang, chairman of the Democratic Alliance for Betterment of Hong Kong, said the postponement would not have an immediate impact on employment.

``I think at the moment the most important thing is to reallocate resources so as to revive the economy and enhance Hong Kong's competitiveness,'' he said.

Hong Kong Construction Association president Wong Wing-ho said the move would aggravate unemployment in the construction sector. If the project was cancelled his company, as one of the bidders, would lose the HK$10 million it spent preparing its proposal.

2. Cheung Kong wins police site project
Eli Lau, The Standard 28 May 2003

Developer Cheung Kong (Holdings) has beaten five other bidders with its HK$352.8 million plan to convert a prime Tsim Sha Tsui site into a tourism-oriented retail and hotel complex.

The development, on the site of the former Marine Police Headquarters, is part of the conglomerate's ambitious plan to expand in the tourism industry following its tender in March to build and operate the Ma Wan theme park.

The government yesterday announced the Tsim Sha Tsui tender had been awarded to Flying Snow, a subsidiary of Cheung Kong, on a 50-year land grant.

The historic headquarters, located at the junction of Salisbury Road and Canton Road, includes a 118-year-old Victorian colonial building.

Part of the 132,000 square foot site area will be transformed into a complex that will be made up of a themed restaurant, hotel and shopping complex.

``The project allows us to preserve its heritage and create major employment opportunities during and after the construction period,'' a Cheung Kong spokesman said last night.

``This is a win-win situation that caters to the best interests of history, tourism and economic considerations.''

Cheung Kong estimated that the project would create 315 jobs during the construction phase and another 500 once it was operational.

Cheung Kong has until March 2008 to complete the project.

But its proposal indicates it may be completed by early 2007.

``The proposed heritage hotel will bring an exciting addition to the tourism attractions in Hong Kong, and will also create a synergy with other existing and new tourist facilities in our prime tourist area in Tsim Sha Tsui,'' the firm's spokesman said.

A Tourism Commission spokesman said the project would be the first time the private sector would be involved in preserving as well as developing buildings of historic significance into a heritage tourism facility.

The spokesman said Cheung Kong had obtained the highest aggregate score in the assessment and met both the requirements on heritage preservation and financial capability.

The location is regarded as a popular tourist spot with several five-star hotels and large-scale shopping complexes nearby.

In March, sources said Cheung Kong had lodged a tender to construct a theme park on a 10.8-hectare site on Ma Wan.

Market sources said the developer had proposed a martial arts theme park based on characters from Louis Cha's novels.

Hong Kong is trying to boost tourism, which contributed about 10 per cent to the SAR's economy last year.

Tourist arrivals rose more than a fifth to a record 16.5 million last year before the Sars outbreak kept travellers away.

Cheung Kong shares fell 2.06 per cent yesterday to close at HK$47.60.

3. 'Give Tamar back to the people'
STELLA LEE, Chief Reporter, SCMP 28 May 2003

London has Trafalgar Square; New York has Central Park. Calls are now mounting for the government to turn the Tamar site into Hong Kong's equivalent, following the shelving of plans to build its new headquarters on the waterfront site.

Officials announced on Monday that plans to develop the Tamar site had been put off for six months so that the government could review its priorities. Yesterday, architects and urban landscape consultants urged them to give the prime area back to the community as an acknowledgment of the value of a healthy environment in the wake of the Sars outbreak.

Under the original $4.9 billion plan, the 4.2-hectare site would have housed a 1.72 million-sq-ft administration complex, a group of Legislative Council buildings covering 286,000 sq ft, and a 172,000-sq-ft exhibition gallery.

Lobbyists said yesterday the government should take the chance to review whether the waterfront site in Admiralty could be turned into a civic centre for the benefit of all.

Professor Bernard Lim Wan-fung of Chinese University's architecture department said he thought the government should consult the public on the issue. "City planning should follow the pulse of the community," he said.

Professor Lim, an architectural adviser on plans for the new Legco buildings on the site, said he did not think it was a good idea to put the legislative and administrative branches of government together in the same place.

"I don't think it would be a happy marriage, whether from an ideological or architectural point of view, to put them together," he said.

"Why do we need such a dense development in such a prime location? If you look at other big cities, they have plenty of low-density and open-space development like Central Park in New York and Trafalgar Square in London," Professor Lim said.

He said officials should have learned the value of a healthy environment from the experience of the Sars outbreak. In particular, the "Team Clean" taskforce led by Chief Secretary Donald Tsang Yam-kuen, which is responsible for finding ways to improve Hong Kong's cleanliness standards, should review the city's building density.

Winston Chu Ka-sun, chairman of the Society for the Protection of the Harbour, had objected to earlier plans to sell the Tamar site to private developers. He said yesterday the plan to build the government headquarters on the site was equally undesirable.

Mr Chu echoed Professor Lim's view that Tamar should be turned into the city's "lungs", as such a civic centre was needed to give Hong Kong a truly international standing.

"If Chief Executive Tung Chee-hwa really wants Hong Kong to become a `world' city, he should do something about it," he said. "It would be crime to sell the site ... It would also be a crime to turn it into the government headquarters. Which officials do you think deserve such a sea view? If I had a say, I would put them in Shau Kei Wan. The Tamar site should be reserved for the public."

British town-planning expert Sir Peter Hall, who conducted a study on Tamar's future at the request of Mr Chu's group two years ago, has said that the retention of the site as a public amenity could make up for Central's lack of cultural facilities and open spaces of international quality.

Sir Peter, an adviser on the Channel Tunnel and other projects for the British government in the 1990s, said a "cultural deficit" had resulted in Hong Kong lagging behind other world-class cities such as London, New York or Paris.

Architect and development consultant John Hui Wing-to, a former president of the Hong Kong Institute of Real Estate Administration, agreed that the government should reconsider its plans. "It should not be a site occupied mainly by icy government buildings. It should be a site that is enjoyed by more members of the public."

4. Marine police HQ to be turned into a 'heritage hotel'
ELAINE WU, SCMP 28 May 2003

The former Marine Police headquarters in Tsim Sha Tsui is described as a prime example of tropical colonial Victorian architecture. SCMP photo

The historic marine police headquarters in Tsim Sha Tsui will be turned into a "heritage hotel" after the right to develop the site was awarded to a subsidiary of tycoon Li Ka-shing's Cheung Kong Holdings.

It was announced yesterday that Flying Snow Ltd had had won the redevelopment tender, agreeing to pay $325.8 million for a 50-year land grant on the site.

This will give the company management rights to develop the 11,000-square-metre site for commercial purposes.

Under the proposal, Flying Snow will turn the main building of the former headquarters into a "heritage hotel".

The other parts of the site will include restaurants and shops to attract tourists.

The project is due to be completed in early 2007 and the construction phase alone is expected to create 315 jobs, plus a further 500 vacancies when the facilities open to the public.

It is the second tourism project in Tsim Sha Tsui to receive finalisation this month. Last week, New World Group said it would develop a Hollywood-style "Avenue of Stars" on the Tsim Sha Tsui waterfront costing $40 million. Both of these projects are part of the government's $250 million plan to revitalise Tsim Sha Tsui as a tourist attraction.

Five companies had bid for the marine police headquarters project, including one which proposed creating a maritime museum. Names of the other companies were not disclosed.

The government put the project out to tender in November. It asked for proposals to preserve and restore the 119-year-old structure, built at the height of the Victorian era in the so-called tropical colonial style.

One requirement was that it be a tourism development.

The building, on a hill overlooking Tsim Sha Tsui ferry terminal with prime harbour views, is a rare example of a colonial-era building that has retained its original charm, and was eyed hungrily by commercial developers after the marine police vacated it in 1996. Representatives of the
Antiquities Advisory Board and Hong Kong Tourism Board made up the panel that picked Flying Snow's bid.

"Hong Kong's colonial past is something that interests tourists, including those coming from Japan and the mainland," said Bonnie Ngan Suet-fong, spokeswoman for the Tourism Board. "It's very important that we can showcase the heritage. It makes for an additional tourism attraction for Hong Kong."

In a statement last night, Cheung Kong promised to develop the site in a way that respected the building's heritage value. "This project allows us to preserve its heritage and create major employment opportunities during and after the construction period. It caters to the best interests of history, tourism and economic considerations," he said.

"We believe converting an historical building into a development project of practical value is an opportunity to extend Hong Kong's past glory well into the future."

5. Reclamation schemes put on hold
CHLOE LAI, SCMP 28 May 2003

Three reclamation projects have been put on hold by the government amid the sluggish property market and record budget deficit.

The projects affected are the Western District Development Scheme, the Tsuen Wan Bay reclamation works and the Sham Tseng project. The plans involved creating 126 hectares to provide housing for 114,000 people.

A government official said the administration did not now believe Hong Kong would need the extra land because the growth in population had slowed. The budget deficit - which is expected to reach $67.9 million for this financial year - and the flagging property market were the other reasons to put the projects on hold.

"Even if we need land resources in the future for accommodation, we still have plenty in the new towns, such as Kwu Tung and Hung Shui Kui in the north New Territories," the official said.

According to the government's forecast, Hong Kong's population, which currently stands at 6.7 million, will grow to only 8.7 million by 2031 because of a low birth rate and an increasing number of people moving back to the mainland.

On Monday, plans to build a $4.9 billion headquarters for the government on the Tamar site were shelved to allow the administration time to review its priorities in the wake of Sars.

It is also believed the proposed Tseung Kwan O reclamation works for the construction of an artificial island for water sports will be abandoned.

And a major reclamation project in Wan Chai is the subject of a court challenge by the Society for the Protection of the Harbour.

The only major reclamation project still due to go ahead is the Southeast Kowloon development at the old Kai Tak airport.

A spokeswoman for the Housing, Planning and Lands Bureau said: "The government is conducting a review of long-term housing and land supply, therefore it has no timetable on when to commence the reclamation projects."

The Planning Department said that minor projects, such as one on Lamma to reclaim a hectare of land for building facilities, will go on.

Among the projects being put on hold, the Western District Development Scheme is the most controversial, with green groups having opposed the idea for years.

Under the plan, 79 hectares of land would be reclaimed off Kennedy Town to house 70,000 people.

Twenty-nine hectares of land would be reclaimed in Tsuen Wan to create homes for 30,000 people, and 18 hectares were intended to be formed at Sham Tseng waterfront to house 14,000 people.

6. Lawmakers given vow on new building
BENJAMIN WONG and AMBROSE LEUNG, 28 May 2003

Hong Kong lawmakers have been assured that they will be provided with a new Legislative Council building by the 2008 election.

The assurance has come even though plans to build it at the Tamar site in Admiralty have been put on hold for six months while the government reassesses its financial position.

Should the $4.9 billion project eventually go ahead, legislators will still get their new building by the time of the election, it was revealed yesterday.

"The government told us if the project is resumed in six months' time, we would still have a new Legco building by 2008 because construction was originally scheduled to be completed in the first half of 2007," said the council's president, Rita Fan Hsu Lai-tai.

But even if the Tamar site project is permanently shelved, legislators have been assured a new home will be found for them at a different location.

Legislators have long argued that there is not enough space in the current Legco building.

The problem will worsen if electoral reforms lead to an increase in the number of lawmakers in the 2008 poll.

The Tamar project was halted on Monday just before tendering was due to begin because the government said it wanted to look again at how public money should be spent in light of the economic impact of the Sars virus.

The government, which is struggling to rein in a record deficit, has already spent $11.8 billion to revive the economy.

Legislators argue that a new Legco building is essential.

"We have just 60 seats for legislators in the building now, and there won't be enough seats if we decide to have more members in 2008," said Mrs Fan.

Many legislators are also unhappy because the government did not consult them before halting the project.

Mrs Fan said: "We're surprised by the decision because it was only two weeks ago that the public works subcommittee approved the project after long discussions with the government.

"The government decided to halt the construction without consulting us."

Lawmaker Margaret Ng Ngoi-yee said: "It is unacceptable. You just can't say one thing today and another tomorrow.

"Being the major user of the finished project, the government should look at the interest of the smaller users, especially when the smaller one is the legislature."

But Tsang Yok-sing, leader of the Democratic Alliance for Betterment of Hong Kong, argued that it was right for the government to focus its resources on reviving the battered economy.

Last night, a government spokeswoman said there would be no need to compensate the tenderers.

"The pre-qualification document states that the government reserves the right to cancel the tender for any reasons and that the government shall not be liable for any costs or expenses incurred or suffered by the applicants in preparing their submissions," she said.

Industry sources said some of the five affected constructors had considered taking the government to court over their losses but decided it would be useless given the clause.

7. Tamar contractors protest over decision
CHEUNG CHI-FAI, SCMP 28 May 2003

The five contractors competing to develop the $4.9 billion Tamar site have expressed anger at the government's decision to halt the project, fearing they may have wasted money in bidding for the contract.

Each of the five contractors, which successfully beat off other contractors, spent at least $10 million in designing and preparing bids for the four-year construction contract, according to Patrick Chan Wing-tung, the secretary-general of the Hong Kong Construction Association.

He said he had received two complaints from association members yesterday, saying the decision had hit their operation and financial status.

The shelving of the Tamar project has also prompted fears among the industry that other public works projects might be postponed or even scrapped.

Other big projects in the pipeline are the superjail on Hei Ling Chau; headquarters for the Independent Commission Against Corruption in North Point; an RTHK complex in Tseung Kwan O; and a Marine Police headquarters in Ma Liu Shui.

"The contractors have spent much time and resources in preparing for that. But now they are facing great uncertainties and even huge losses," Mr Chan said.

The five contractors are China State-Hip Hing Construction Joint Venture, DRC-Tamar Joint Venture, Gammon Skanska, Hsin Chong-Obayashi Joint Venture, and Paul Y.-Shun On Joint Venture.

Mr Chan said the Tamar project was vital to keep the struggling construction industry alive, with unemployment in the industry now at about 17 per cent.

But a spokeswoman for the government's administration wing stressed that the Tamar project had not been scrapped and that the government was still committed to other public works projects, amounting to about $27 billion a year.

A spokesman for the Kowloon-Canton Railway Corporation said the decision would not affect its design of the Sha Tin-Central rail, which will have a station near the Tamar Site. The rail is expected to be completed by 2008.

8. The Government's New Home Is Not The Only Project Put On Hold . . .
SCMP, 28 May 2003

Tseung Kwan O: An artificial island planned off the new town for water sports facilities. The project is under public consultation.

Western District: 79 hectares of land to be reclaimed at the waterfront between Sai Ying Pun and Kennedy Town to house 70,000 people. The project has been put on hold.

Wan Chai: 26 hectares of reclaimed land planned along the Wan Chai and Causeway Bay waterfront for a new convention centre and open public space. The project is now under judicial review.

Sham Tseng: 18 hectares to be reclaimed near Angler's Beach to house 14,000 people. The project is put on hold.

Tsuen Wan: 29 hectares of land to be reclaimed off Belvedere Garden to house 30,000 people. The project is on hold.

9. Tamar site: the makings of an urban renaissance?
SCMP, 28 May 2003

Perhaps it is only natural that a location associated with the pleas of British opium merchants for imperial naval support should continue to generate controversy. HMS Tamar, a warship that paid its first port call on Hong Kong in 1897, gave its name to the naval dockyard and base, with an adjacent army barracks, for nearly a century.

Known innocuously as "the Tamar site", ever since the British military began to move out in 1993, its future has been up for grabs. It has been seen alternately as a developer's dream, a developer's nightmare, and a vanity headquarters for Hong Kong's post-1997 government, anchoring a spectacular waterfront civic space, depending on the state of Hong Kong's finances and the property market.

While waiting for a decision from Hong Kong's government on what to do with the property, inherited along with 24 other former British military sites, it has served largely as a parking lot, helicopter launching pad, and start and finish line for the annual Lunar New Year's Day parade. For those unfamiliar with the city's landmarks, look for a featureless concrete platform north of Admiralty Centre and next to a white rectangular building with a funnel-shaped base by the waterfront - it was the headquarters of the British garrison before 1997 and is now used for the same purpose by the People's Liberation Army. The site's glory moment was in 1997 when it was the staging place for governor Chris Patten's last farewell. Its economic returns to the city since then have been minimal.

In the latest twist, on Monday, the government announced that it would "temporarily" put on hold plans to build a new HK$4.68 billion headquarters and civic space, putting up for a six-month review a building programme that was supposed to begin in 2004. Leaving aside the parlous state of government finances, it would be inappropriate to spend public money on a grand office project principally to benefit public officials in the midst of an economic crisis.

With a glut of commercial office space expected to last at least until 2010, the government might better help stimulate the economy by renting some of it. A case can be made for moving ahead swiftly with capital-intensive infrastructure projects that generate economic as well as cash returns. But while the projected 39-month building programme would undoubtedly create jobs, it is not one that will generate economic and cash returns when it is completed, unlike the much debated bridge to Zhuhai that will help Hong Kong tap into the growth of the western part of the Pearl River Delta region. There are also more creative ways to unlock the potential of Admiralty's unfortunate eyesore.

Now that plans for a government office tower have been put off, why not dust off some of the earlier proposals to develop Tamar as a magnet for tourism and civic activity? Two years ago, the Society to Protect the Harbour, a local civic group, hired one of the world's leading urban planners, Sir Peter Hall, to come up with scenarios for the 4.2-hectare site.

The plans included a seaside plaza, open-air theatre, marina, and floating casino. Part of the idea, according to Sir Peter, was to put Hong Kong into the big leagues of cities that attract attention through their lifestyle and environment.

Many other cities have gone down this route, from Baltimore to Singapore and Shanghai, transforming former industrial zones along their waterfronts into symbols of urban renaissance. These combine restaurants, night life, entertainment, shopping, residences and office space. They generate cash and jobs, and serve as international landmarks. The Norman Foster-designed West Kowloon will be one such showpiece, but who says Hong Kong doesn't have room for two?

10. Pearl Delta hailed as rising global star
KENNETH KO, SCMP 28 May 2003

The Pearl River Delta has emerged as a megacity on a par with Shanghai and Beijing as a focus of interest for property players, according to a Jones Lang LaSalle study.

The two cities and the delta are among the most dynamic regions in the world and will continue to be China's main commercial hubs, the property consultant says.

In a report, Rising Urban Stars - Uncovering Future Winners, published yesterday, it says market transparency in the three regions is still low by international standards but is expected to improve.

It says property players will increasingly look to China's second- and third-tier cities as well as inland cities such as Chongqing and Xian.

The Pearl River Delta comprises Guangzhou, Shenzhen and several other expanding cities. They are among 24 potential "rising urban stars", out of 500 cities worldwide, identified by the Jones Lang LaSalle report.

Eleven of the future star cities are in Asia, with eight in China. Others include Suzhou and Dalian, due to their strong technology infrastructure development.

These potential winners represent a broad diversity in terms of size, function, economic maturity and property market characteristics, the report says.

Timothy Bellman, regional director for strategy and research for the Asia Pacific at Jones Lang LaSalle, said: "We believe that the 11 future rising urban stars in Asia will be of increasing interest to international real-estate occupiers and investors in the near future.

"Some occupiers are focused on these cities because they offer fast-growing consumer markets, others because they provide a talented workforce in a low-cost production base. As market transparency improves, real-estate investors will follow."

The report says the Pearl River Delta, Shanghai and Beijing saw significant property construction during the 1990s, which has led to some oversupply, exacerbated by the Asian financial crisis of 1997.

Guangzhou is the hub of the delta, with oversupply in the office sector but growing opportunities in the retail market.

Shenzhen is described as the strongest "rising city" of the delta, with a shift to high-value business activities.

Fung Kin-keung, Jones Lang LaSalle country head in Hong Kong, said: "As the research suggests, the future of Hong Kong is inextricably linked to that of the Pearl River Delta."

He said the Pearl River Delta gave Hong Kong businesses much-needed competitiveness, with an abundant skilled workforce at a reasonable cost.

"Integration is therefore in the best interests of both Hong Kong and the other cities in the Pearl River Delta in order to achieve greater success in this Asian century," he said.

"From a real-estate perspective, Hong Kong is home to some of the strongest real-estate companies in the world. Hong Kong developers have been instrumental in introducing top-quality properties and real-estate expertise to China.

"The rising urban stars in China will undoubtedly provide more opportunities for the Hong Kong real-estate cluster to further strengthen its footholds in China."

The report represents the second phase of Jones Lang LaSalle's World Winning Cities research study, a multi-year effort to identify the essence of contemporary city competitiveness and assess the contribution of real estate to sustainable competitive advantage. From this it is intended to draw implications for occupiers, investors, developers and governments.

"The rapid economic growth of cities in developing countries like China and India is likely to lead to the emergence of new global flows of real-estate capital over the coming decade," Mr Bellman said.

"These two countries will not only attract capital but will significantly become important sources of real-estate investment as their contribution to the global economy rises."

He said subsequent phases of the survey will reveal other rising urban stars and explore evidence of new clusters and connectivity between cities. Formal predictions for all cities using a balanced scorecard will be published later this year.

11. SHKP close to striking deal to take development private
KENNETH KO, SCMP 28 May 2003

Sun Hung Kai Properties (SHKP) will soon reach an agreement with the government to convert Sham Wan Towers, a mixed housing development in Ap Lei Chau, into a private project for sale.

Executive director Michael Wong Yick-kam said a deal for the conversion might be struck next month.

He did not give details of the likely agreement, but said the settlement would be similar to the arrangement for a similar mixed development undertaken by Hang Lung Properties.

This means SHKP will probably share the proceeds from the sale of Sham Wan Towers with the government.

Sham Wan Towers was one of two mixed housing development projects awarded to private developers in 2000 under a pilot scheme aimed at improving the quality of subsidised housing.

The other mixed development, being built by Hang Lung Properties, is in West Kowloon.

The two sites were sold at a discount to encourage developers to take part in the pilot scheme.

A third of the finished flats were originally supposed to be sold to qualified buyers under the Home Ownership Scheme (HOS) at discounted prices, with the remainder for private sale.

However, the government last year indefinitely suspended the HOS, which led to talks with developers on the fate of the two mixed projects under construction.

The question is whether developers will have to pay an additional premium or find a way to repay the government the difference arising from the discounted land value if the project is to be made purely private.

Last month, Hang Lung Properties won an approval to convert its 1,616-unit project by sharing the sales proceeds with the government.

Sham Wan Towers consists of 1,040 units of about 600 square feet to 950 sq ft in three high-rise towers. SHKP is awaiting the pre-sale consent. It is one of the six large residential developments scheduled for sale by SHKP before the end of the year.

SHKP plans to release about 4,000 units in six projects to generate HK$9 billion in proceeds. They include YoHo Town in Yuen Long, Park Island in Ma Wan and 18 Farm Road in To Kwa Wan.

Meanwhile, Mr Wong said the existing consent system for the pre-sale of unfinished residential projects was sound and effective, and that the recent failure of the Villa Pinada development in Tuen Mun was an isolated case.

He said the system had been in place for more than 10 years and had sufficient controls to ensure the financial capability of developers before pre-sale consent for a project was granted. Villa Pinada was the first project to have struck financial problems.

Mr Wong said the Villa Pinada incident should not affect buyer confidence in purchasing unfinished flats from developers. Villa Pinada is being built by small developer True Gold Investments. A total of 204 flats were pre-sold, generating more than HK$500 million. But True Gold was placed in receivership last Friday after it failed to repay about HK$200 million in syndicated loans to the Bank of China.

12. Young towns feel brunt of excess
EUNICE WONG SCMP 28 May 2003

Newly developing areas are the worst hit by an oversupply in the mass residential market, and numerous projects to be launched in the next few years will maintain the pressure, say property agents.

Large numbers of new flats are coming to the market, particularly in Tseung Kwan O, Tsuen Wan, Yuen Long and West Kowloon.

Midland Realty executive director Victor Cheung Kam-shing said: "The whole mass residential market has the problem of supply exceeding demand. But I expect the situation will stabilise by [next year] or 2005. After 2006, supply will ease."

About 7,981 units are expected to be completed this year in Sai Kung district, which includes Tseung Kwan O, according to the government. More than 10,000 new flats are due to be completed in the area by 2005.

About 12,800 units are to be completed by 2005 in Yau Tsim Mong, including West Kowloon. About another 10,150 will be completed over the same period in Shamshuipo, including Cheung Sha Wan.

Yuen Long, in the northwest New Territories, will have about 6,476 new units in the coming three years.

Mr Cheung said there was greater pressure on prices in West Kowloon, Tseung Kwan O and the northwest of the New Territories than in other areas.

"Primary transactions will account for more than 60 per cent of total transactions in the market in these districts in the coming year. This compares with primary transactions accounting for less than 40 per cent of total transactions in the overall market in the coming year," he said.

Centaline Property Agency said projects to be completed in Tseung Kwan O up to 2005 included Tseung Kwan O Plaza by Nan Fung, Ocean Shores phase three by Swire Properties and Sun Hung Kai Properties, and a project at Hang Hau Station by Kerry Properties and Sino Land.

Mr Cheung said the Mass Transit Railway extension in Tseung Kwan O would attract buyers from outside the district.

He said nearly 2,500 new units in Tseung Kwan O could be absorbed this year.

Districts elsewhere in the New Territories, such as Tai Po, did not have too many new units coming to market, but prices in such areas would come under pressure due to the oversupply in the northwest.

Centaline Property Agency executive director Louis Chan said: "The supply of flats was planned a long time ago, but the market turned out to be bad."

He said flats supply would peak this year and next.