| News
Stories: |  |
Click-on these
handy "jump links" to quickly access the news item
you're looking
for. 1.
LCQ4: Consolidated development mode for North Point
Estate and adjacent lot 2.
LCQ7 : Measures to strengthen selection of public works
contractors 3.
Discounts to ease on HOS flats 4.
Henderson Land eyes two new sites 5.
Building company directors deny piling case conspiracy
6.
Public works contract system tightened after cost overruns
7.
Small players set for bidding battle 8.
HOS reduction fails to lift sales 9.
KCRC puts off land-premium settlement 10.
Serviced flat group boosts brand in Asia
1. LCQ4: Consolidated development mode for North Point Estate and adjacent lot
Following
is a question by the Hon Abraham Shek Lai-him and a reply by the Acting Secretary
for Housing, Ms Elaine Chung, in the Legislative Council today (June 12): Question:
At its meeting on the 17th of last month, the Strategic Planning Committee of
the Housing Authority decided to maintain the original plan to redevelop North
Point Estate and an adjacent lot of government land in a mixed mode, i.e. a mix
of private and public housing. In this connection, will the Government inform
this Council: (a) whether it has compared the mixed-mode to the entirely-private
mode of redevelopment of the site in the following aspects: revenues from the
land auction, impacts of the sale of the completed buildings on the first-hand
and secondary private residential markets in that district and on the property
market as a whole, as well as the annual revenues from the levy of Government
rates; if it has, of the results; if not, the reasons for that; and (b) of the
measures it will take when it approves the deeds of mutual covenant concerned
to prevent any future disputes between the owners of the public and private flats
in respect of building maintenance and management issues? Reply: Madam President,
The Housing Authority (HA) holds a proper land title to the three lots on which
the North Point Estate (NPE) now stands. These lots can be used for developing
high-rise public housing blocks. It is the intention of the HA to redevelop NPE.
In order to encourage private sector involvement in the public housing programme
and to make the best use of valuable land resources to derive optimum economic
and social benefits, the HA proposes to adopt the consolidated development mode
for NPE and adjacent Government land (including a public transport interchange
and open space). The HA's consolidated development plan will result in major planning
gains such as: (a) full development of the land potential; (b) incorporation of
office, hotel, retail centre, school, private sector flats, Home Ownership Scheme
flats and other Government, Institution or Community (GIC) facilities into the
development plan to serve residents of the district and other members of the public;
(c) enhancement of transport links and accessibility of the area; (d) integration
of the currently fragmented open space; and (e) redevelopment of the dilapidated
NPE. The environment of North Point will be greatly enhanced upon completion of
the whole project. There will be positive effects on the primary and secondary
residential property market as well as any residential and commercial developments
in the Eastern District. The land lots owned by HA account for about 73.3 per
cent of the total amalgamated area. Had the HA not taken the initiative to redevelop
NPE, the potential of this prime site would not have been released for the benefit
of the entire community. The reason is that the public transport interchange and
open space are earmarked as GIC and recreational use respectively in the outline
zoning plan, rendering the present development potential of these two sites to
be minimal. In announcing the redevelopment of NPE in March 2000, the HA pledged
to the residents and the Eastern District Council that a form of public housing
would be retained in the redevelopment proposal. Therefore, the HA did not consider
redevelopment of the joint site solely by the private sector. The government has
not estimated the amount of gains that would be generated by this hypothetical
proposal. Under Section 7(2) of the Rating Ordinance (Cap 116), the ratable value
of a tenement shall be an amount equal to the rent at which the tenement might
reasonably be expected to be let, from year to year. According to the Rating and
Valuation Department, the rates of the newly-built flats in the redeveloped NPE
would not be very different, irrespective of whether the mixed or private development
mode is adopted. Like other flat owners, the rights and obligations of the individual
flat owners in the redeveloped NPE would be governed by the deed of mutual covenant
and the provisions of the Building Management Ordinance (Cap 344). These provisions
will provide the legal framework for flat owners in the redeveloped NPE to jointly
take part in the day-to-day management and maintenance of their property for the
common good. In preparing the deed of mutual covenant, the developer will have
to follow the guidelines issued by the Legal Advisory and Conveyancing Office
and ensure that the legitimate interests of all the parties concerned are balanced
in an equitable manner. If the HA formally approves the North Point project, the
NPE will be HA's first consolidated development project. The HA will have to work
out many important details between now and two years later when the first tender
is expected to be let. Members of the community have very different views on this
project. To a certain extent, the views are polarized. The Government and the
HA will consider further different points of views and the experience of other
agencies when devising specific implementation details for the North Point project.
[Source:
Hong Kong Government, 12 June 2002] 2.
LCQ7 : Measures to strengthen selection of public works contractors
Following is a question by the Hon Albert Chan Wai-yip and a written reply by
the Acting Secretary for Works, Mr Keith Kwok Ka-keung, at the Legislative Council
meeting today (June 12) : Question : It is learnt that the Mainland registered
Guangdong Water Conservancy and Hydro-power Engineering Development Company Limited
("GWCH-PRC") and the Guangdong Water Conservancy and Hydro-power Engineering
Development Company Limited ("GWCH-HK") bear a holding and subsidiary
relation. Although GWCH-HK, the subsidiary company, is not one of the contractors
approved by the authorities, it has undertaken many SAR Government public works
projects with the authorization of its parent company. In this connection, will
the Government inform this Council: (a) of the reasons for allowing GWCH-HK, which
was not on the List of Approved Contractors for Public Works, to enter into contracts
to undertake public works projects; (b) given that GWCH-HK, the subsidiary company,
has gone into voluntary liquidation, of the progress of the Government's actions
to recover from the parent company in the Mainland the losses arising from works
that were unfinished; (c) of the current number of public works projects formerly
undertaken by GWCH-HK which have to be re-tendered, and details of these projects,
including the project titles, the estimated delay in time, additional costs arising
from the delay and the names of the new contractors; and (d) whether, drawing
on the experience in this incident, the Government will stipulate new requirements
and work out new measures in future reviews, with a view to preventing the recurrence
of similar incidents; if so, of the details; if not, the reasons for that? Reply:
Madam President, (a) GWCH-PRC became an Approved Lists of Contractors for Port
Works, Roads and Drainage, Site Formation and Waterworks on 26 October 1981. It
appointed GWCH-HK as its authorized representative in Hong Kong for the execution
and performance of these contracts. During the period from 1982 to 1999, it has
been awarded 25 contracts of which 21 have been successfully completed with satisfactory
performance and the remaining 4 contracts have been re-entered as a result of
the Contractor's poor performance during 2001. (b) There are compulsory winding
up proceedings relating to GWCH-HK which are continuing. The Government is currently
reviewing all its options in relation to the recovery of its losses arising from
the re-entered contracts. (c) There are four former public works contracts with
GWCH-PRC which have to be re-tendered. Details of these contracts are tabled at
Annex. (d) Drawing on the experience in previous contracts with poor performance
of the contractors, we have recently completed a review on tightening the control
of public works contractors. These measures are progressively being implemented.
The measures include tightening the financial criteria for the admission to and
retention on the approved lists of contractors. Failure to comply with these criteria
with render the contractor liable to regulating action. These financial criteria
include: (i) carrying out a profit trend analysis before a tender is recommended;
(ii) raising the capital requirements of a contractor for retention on the approved
lists of contractors; and (iii) requiring the contractor to provide additional
information for auditing, besides annual audited accounts and management accounts.
To strengthen the selection of contractors and evaluation of tenders, we will
introduce a new marking scheme later this year. The new marking scheme will take
into account both the tender price and the quality of work including the past
performance of the tenderer. This provides an incentive for contractors to complete
their contracts successfully. We have tightened the criteria for taking regulating
actions. A contractor will be suspended from tendering when he receives two consecutive
adverse performance reports under the same contract instead of the previous criteria
of three consecutive adverse reports. We will regularly review our contractor
management system and look for areas for improvement. We will, if necessary, stipulate
further requirements and introduce additional measures to tighten the control
on contractors and to ensure proper project delivery. [Source:
Hong Kong Government, 12 June 2002] 3.
Discounts to ease on HOS flats
Home Ownership Scheme (HOS) flats are expected to become more expensive following
Director of Housing Tony Miller's disclosure yesterday that the government intends
to reduce the discount for subsidised units. ``Discounts will be adjusted according
to [market] prices, which have dropped,'' he told Cable TV yesterday. He did not
disclose the extent the discount - now 40 per cent - would be cut. Miller denied
the aim was to minimise competition with the private market. ``We serve those
who cannot buy a flat [in private market], so affordability is our main consideration,''
he said. Under the HOS, the government sells subsidised flats at prices below
those in the private market. Legislator Lau Ping-cheung, who represents the Architectural,
Surveying and Planning Functional Constituency, said the lower discounts would
not have a big impact on the housing market. ``We see the private residential
market is adjusting fast while adjustment in public sector is slow because it
is not driven by market mechanisms, but artificially adjusted,'' Lau said. Housing
Authority member Wong Kwun said reducing the discount was unfair to home buyers.
The government is to resume the sale of HOS flats from July after they were frozen
in September last year. [Source:
The Standard, 13 June 2002] 4.
Henderson Land eyes two new sites
Henderson Land Development has expressed interest in bidding for two sites in
next Monday's government land auction, which could generate around HK$400 million.
This will be the second government land sale of the financial year. Four sites
in April fetched about HK$2.97 billion. Henderson's senior property manager Donald
Cheung said the sites at North Point and Sha Tin were attractive despite being
small. ``The North Point site is near the MTR station, while there is always a
high property demand at Sha Tin new town,'' Cheung said. ``So I think both sites
have their own favourable conditions.'' K Wah Real Estate had originally showed
interest in the sites. But the company has yet to reveal further details. The
North Point site on King's Road covers 15,070 square feet. The Sha Tin site at
Kong Pui Street measures 14,628 square feet. They are both classified for non-industrial
use. Centaline surveyor Jame Cheung predicted the North Point site would go for
around HK$270 million. His forecast for the Sha Tin plot was about HK$130 million.
``Although the sites are small, I would not rule out the possibility that giant
property developers will bid for them too,'' Cheung said. He expected the sites
would be developed into apartments measuring around 600-700 square feet each.
Director of CS Surveyors Limited Cheng Win-ming estimated the North Point site
would fetch an overall accommodation value of around HK$1,700 psf. The Sha Tin
site, Cheng added, would go for around HK$1,350 psf. Both surveyors believed the
government's mixed development plan and the reduction in subsidised flats sales
announced recently would not effect the land sales. [Source:
The Standard, 13 June 2002] 5.
Building company directors deny piling case conspiracy
Two building sites in a Sha Tin housing development were demolished after construction
company directors ordered their employees to fudge work records and employ methods
which fell short of Housing Authority specifications, a jury heard yesterday.
Prosecutor Peter Callaghan told the Court of First Instance Chan Kwong-yee, 48,
and Tom Yiu Yiu-nam, 46, conspired to defraud the Hong Kong Housing Authority
between April and December 1998. The men yesterday denied one count of conspiracy
to defraud over the $17 million contract to lay 36 bored pilings for two apartment
buildings in a Sha Tin Home Ownership Scheme development. Mr Callaghan said the
Housing Authority sent out tenders to lay the foundations for the high-rise buildings
in October 1997 and awarded the $63 million contract to Zen Pacific Civil Contractors
on February 7, 1998. But Zen Pacific subcontracted part of the work to Hui Hon
Contractors Ltd - run by the two defendants - without the Housing Authority's
knowledge, Mr Callaghan said. He explained to the jury that the nature of the
work meant the Housing Authority had to approve construction specifications, such
as the depth of the pilings. Recommendations from an independent geo-technical
engineer were also incorporated into the contract to ensure the pilings would
be bored at least 6.9 metres into the bedrock. But Mr Callaghan said Hui Hon site
agent Li Wai-hing, 45, who pleaded guilty to the same offence and is awaiting
sentencing, submitted false records to hide the fact the completed work differed
greatly from the contract's specifications. The prosecutor said the two directors
ordered tests be manipulated to deceive the Housing Department, adding that at
one stage, tape measures were cut and altered to lengthen the measurements of
the bored piles. "At every stage in this project, something was done at vital
stages where the Housing Department had to be informed, and if the Housing Department
was in a position to find out, steps were taken so the Housing Department would
be deceived," he said. Mr Callaghan said that as a result of the substandard
work, construction was suspended on January 9, 2000. The next month, the Building
Committee ordered the demolition of the two construction sites. Of the 36 pilings
erected by Hui Hon, only 15 were the lengths recorded by the subcontractors, and
seven were within contractual specifications. The foundation level of the pilings
was also between two and 15 metres short of the required length. The trial continues
before Deputy High Court Judge Anthony To Kwai-fung today. [Source:
SCMP, 13 June 2002] 6.
Public works contract system tightened after cost overruns
The screening of public works contractors has been tightened following a series
of poor performances, including the expulsion of a mainland-linked firm from four
contracts that cost taxpayers around $300 million last year, according to the
Works Bureau. In a written reply to a Legco question, Acting Secretary for Works
Keith Kwok Ka-keung said yesterday that steps were being introduced to tighten
the selection of contractors. It was revealed yesterday that the expulsion of
the Hong Kong arm of mainland-based Guangdong Water Conservancy and Hydro-power
Engineering Development Company from four contracts due to poor performance would
cost taxpayers $321.6 million after the contracts had to be re-tendered. These
include an extra $210 million for the upper River Indus flood-relief works, and
the rest from the re-tendering of the Central and Wan Chai East Pumping Stations
and Screening Plants projects and further developments in Tin Shui Wai. The company
was expelled from the contracts after falling behind schedule in a flood-relief
project that caused heavy flooding along Ng Tung River in Sheung Shui last year.
Mr Kwok said that under the new controls on sub-contracting, contractors would
be required to raise their capital and submit additional information for auditing.
A contractor's bid would also be assessed using a new system based on both tender
price and the firm's past performance. Mr Kwok said a contractor would be disqualified
from future tenders if it was slapped with two - instead of the current three
- consecutive poor performance reports per contract. "Drawing on the experience
in previous contracts with poor performance of the contractors, we have recently
completed a review on tightening the control of public works on contractors. These
measures are progressively being implemented," he said. The Hong Kong arm
of Guangdong Water Conservancy has gone into voluntary liquidation. The Government
is seeking compensation from its mainland parent. The Government expects to recover
around $210 million from the $756.3 million spent on the Ng Tung River flood-prevention
project. It is also exploring other options to get compensation for the other
re-tendered contracts. Guangdong Water Conservancy and Hydro-Power Engineering
Development Company won 25 public works contracts between 1982 and 1999, of which
21 were successfully carried out. [Source:
SCMP, 13 June 2002] 7.
Small players set for bidding battle
Small and medium-sized developers are expected to bid aggressively for two residential
sites to be auctioned next Monday. Surveyors forecast that the two sites at the
second auction this financial year could earn more than HK$400 million for the
Government. The sale is also seen as a timely test of developer confidence in
the prospects following the Government's announcement last week on the resale
of Home Ownership Scheme (HOS) flats but a substantial cutback in long-term production.
On sale are a 15,074-square foot site at 632 King's Road, North Point and a 14,626
sq ft site in Sha Tin. Bidding is expected to be stronger for the North Point
site, a vacated government quarters, due to its urban location. Surveyors put
a price tag of about HK$280 million on the site while the Sha Tin lot was expected
to sell for HK$120 million to HK$127 million. Phileas Kwan, executive director
of developer Asia Standard International, said the group would be interested in
bidding at the auction. Andrew Choi Fook-ming, senior manager of property development
at New World Development, expected the auction to draw keen interest from small-
to medium-sized developers because big players had more alternatives. "Our
bottom-line [for bidding in the land auction] will be a bit conservative,"
he said. Mr Choi pinpointed the more attractive development potential of the North
Point site due to its proximity to an MTR station. Both the North Point and Sha
Tin sites can incorporate non-residential premises, usually shops, on the lowest
three floors of the development, with the area above for residential use. With
commercial elements, the North Point site can provide a total floor area of up
to 165,800 sq ft based on a plot ratio of 11 times while the Sha Tin lot can provide
up to 93,900 sq ft based on a ratio of 6.42. The plot ratio and hence developable
floor area could be lower if developers opted to build less shop space or made
it purely a residential development. CS Surveyors executive director Cheng Wing-ming
made his forecasts based on the maximum developable floor area. He projected a
HK$280 million price for the North Point site, representing an accommodation value
of about HK$1,700 per sq ft. He expected the Sha Tin lot to sell for HK$127 million,
representing an average of about HK$1,350 per sq ft. Mr Cheng said the HOS policy
revision had no impact on his forecasts, saying the subsidised housing changes
had so far had little effect on prevailing property prices. He expected to see
healthy bidding at the auction because the two sites were small in size and especially
attractive to smaller developers. "North Point is a traditional residential
district and Sha Tin is a developed new town. Both areas have strong underlying
demand for housing and developers should feel comfortable to buy and sell at reasonable
profits." Knight Frank valuation director Anthony Lau Chun-kuen also forecast
a HK$280 million price for the North Point site, based on a lower plot ratio of
10.5, assuming that only the two lowest floors were used for shops. The Sha Tin
lot's price was tipped to be HK$120 million, based on a plot ratio of 5.7. "The
HOS policy change is positive news although it has offered no stimulus to home
prices. "However, the auction results should be a timely gauge of developer
confidence to a certain extent," he said. SK Pang Surveyors & Co managing
director Pang Shiu-kee said developers should choose to build fewer shops because
the value of retail units on both sites was expected to be low. "The Sha
Tin lot may be even developed as a pure residential project. The North Point site
should receive stronger bidding due to the limited supply of land on Hong Kong
Island." [Source:
SCMP, 13 June 2002] 8.
HOS reduction fails to lift sales
The reduction of subsidised flat sales failed to boost the private residential
market as sales last week declined compared with the past few months. Agents said
the weekend sales of new projects such as Sky Tower and Liberte were lower than
expected. A spokeswoman for Sun Hung Kai Properties said about 200 units at joint
venture residential project Liberte in Cheung Sha Wan were sold last Saturday
through public sale. Meanwhile, Cheung Kong (Holdings), New World Development
and Shanghai Industrial Investment said more than 40 units at Sky Tower in To
Kwa Wan were sold during the weekend. Centaline Property Agency Kowloon residential
associate director Sandia Lau said the market had expected Sky Tower and Liberte
to generate satisfactory sales due to their discounted prices compared with previous
sales, given the latest subsidised housing policy revision. Ms Lau said primary
transactions had fallen by up to 50 per cent this month compared with April when
market momentum was boosted by the encouraging result of the last land auction.
The market response for Sky Tower was worse than expected, she said, although
the price level for the latest batch was even lower than Liberte. ''A vague marketing
strategy [adopted by developers of Sky Tower] could disturb buyers' decision making,''
she said. Ms Lau said the decline of primary residential sales reflected the lack
of stimulation in the market by the revised subsidised housing policy. ''The market
needs some time to accumulate further demand. Substantial sales in previous months
had largely absorbed the cumulated purchasing power,'' she said. However, some
analysts said the resale of Home Ownership Scheme (HOS) flats would pressure flats
of HK$1 million to HK$2 million. HSBC Securities analyst Derek Cheung said the
latest HOS policy was no surprise to the market. The private housing sector was
oversupplied even without HOS flats, he said, adding that any HOS supply would
worsen the situation. Property agent Chesterton Petty expected the residential
market to recover gradually but prices would not experience any significant upward
movement in the next few months. Ms Lau said the reduction of HOS flat sales had
failed to rejuvenate the vulnerable property market and the Government continued
to show determination to stabilise prices. ''When people feel flat prices are
unlikely to increase, they won't rush to buy, especially those feeling insecure
about their jobs,'' she said. Ms Lau did not forecast a significant rebound in
the private residential market in the near term but said transaction volume in
the secondary market had increased about 10 per cent during the past weekend.
[Source:
SCMP, 13 June 2002] 9.
KCRC puts off land-premium settlement
Kowloon-Canton Railway Corp (KCRC) has deferred the land premium settlement for
a one million square foot residential development in Tin Shui Wai following a
premium-charge rise. Sources said the Lands Department had raised the land premium
charged for the site after the April land auction result was better than expected.
KCRC had refused to accept the offer at this stage, a source said. The Government
has agreed to extend the acceptance deadline to the end of this month. The railway
company owns a site at Tin Shui Wai light railway station with a developable area
of 982,200 sq ft, including about 2,000 sq ft for retail space. Cheung Kong (Holdings)
had settled the land premium charged for a neighbouring site with a 1.7 million
sq ft developable area for residential use in April. A KCRC spokesman said Cheung
Kong had intended to combine its site with KCRC's for a joint development but
the plan had been revised and Cheung Kong was proceeding with the development
of its own site. The spokesman said: "We are prepared to seek a development
partner through a tender process but the schedule has yet to be decided."
He said the company was negotiating the Government's land premium and expected
the project would not be tendered soon. In the meantime, a larger KCRC development
in Tsuen Wan would close for expression of interest by developers on Friday, he
said. The 4.28-hectare site at Tsuen Wan West Station along the West Rail comprises
2.01 million sq ft for residential use, 409,000 sq ft for retail and 169,000 sq
ft for public parking. Surveyors estimated the project could require an investment
of more than HK$5 billion, assuming an average cost of HK$2,000 per square foot
- including construction, land premium and interest expenses. The KCRC spokesman
said the Tsuen Wan project could come up for tender in a few months. Another KCRC
railway development at Ho Tung Lau depot in Sha Tin would be offered soon, he
said. KCRC had received 12 expressions of interest from developers in March for
the 1.5 million sq ft residential-retail joint-venture development. The tender
could be launched next month, he said, taking into account a Hang Hau Station
residential project tender by MTR Corp along the Tseung Kwan O extension would
be closed on June 24. [Source:
SCMP, 13 June 2002] 10.
Serviced flat group boosts brand in Asia
Serviced apartments provider Shama Group plans to invest HK$400 million over the
next two years establishing its own regional brand, according to principal Philip
Morais. The group, tied up with a fund managed by Macquarie Bank of Australia,
was spun off from Trans-Asia Group which had 30 years' experience of property
development and serviced apartment management in Hong Kong. The group spent HK$300
million on a commercial block near Times Square in Causeway Bay last year and
allocated HK$80 million to renovate and furnish the building, creating 110 serviced
apartments. Shama Group chief executive Elaine Young said: "It will be renamed
as Shama Times Square and is our flagship property in Hong Kong." The renovation
cost was HK$1,000 per square foot and the quality of the serviced apartments,
measuring from 380 to 1,170 square feet, was on a par with a five-star hotel.
"We provide a wide range of rentals, from HK$14,000 to HK$70,000 per month,"
she said. The 110 units were expected to generate HK$30 million to HK$40 million
rental income per year, and the units would be ready for lease after a guest-house
licence was issued by next month. Shama Times Square features 18 studio units,
86 one-bedroom apartments and six two-bedroom apartments. Rental period is from
one month to one year. She said the group had transformed the building from office
use into a customised-fitted, well-equipped serviced apartment block and was confident
of double-digit rental yield. The average rentals for serviced apartments of more
than HK$40 per square foot was nearly double that of offices in the district,
she said. The firm had three other smaller-scale serviced apartments in Hong Kong
with 75 units and saw 94 per cent occupancy. The properties are Shama Central
in Peel Street, Shama Soho in Staunton Street and Shama Wanchai in Sik On Street.
Mr Morais said Shama Group was still looking for property acquisitions and would
further expand regionally. "Shama could invest up to US$50 million over the
next two years to create a regional brand," he said. Macquarie Property Management
managing director Craig Wallace said half this budget would be distributed in
China and Hong Kong, and the balance for other Asian countries such as South Korea
and Japan. He expected a strong market for serviced apartments in China as World
Trade Organisation accession brought more expatriates into the country. Key cities
such as Shanghai, Guangzhou and Beijing would be the destinations, he said. Mr
Morais said the group was negotiating property acquisitions in Guangzhou and Shanghai
to strengthen its portfolio in the region. He declined to give details but said
the Shanghai project could provide up to 500 residential units and 100 units would
be allocated for serviced apartments under the brand of Shama while another in
Guangzhou could add 30 to 40 units to the portfolio. Apart from serviced apartments,
he said the group had also planned to set up Shama Residence for residential development
in Hong Kong. "A suitable site has been identified," he said. The site
was on Hong Kong Island because research showed greater demand for higher-end
residential developments on the island. [Source:
SCMP, 13 June 2002] |  |
|
