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1. Luxury projects to attract big money

2. Hopewell pushes on with bridge link

3. Strict regulation of railway land urged

1. Luxury projects to attract big money
Nicole Kwok, The Standard 25 June 2003

With high-end flat sales picking up, developers have launched two luxury projects in The Peak and Island South.

Swire Properties expects to pocket HK$300 million for the sale of four houses at 3 Coombe Road on The Peak.

General manager Gordon Ongley said the asking price of one of the semi-detached houses was HK$68 million, or HK$15,000 per square foot, while offers would be invited for the other three houses.

The project, also called 3Coombe Road, offers two semi-detached houses and two detached houses with floor areas of about 4,400 sq ft.

The company's senior development manager, Adrian To, said construction cost was about HK$140 million, or HK$8,000 psf.

Ongley also said the company was making steady progress in talks with the government on the land premium for the Mariner's Club site in Tsim Sha Tsui and expected to reach a settlement this year.

Emperor Investment, a subsidiary of the Emperor Group, expects to reap HK$140 million from the sale of five luxury houses at the Royal Bay project in Chung Hom Kok, near Stanley. Two of the houses will be launched at prices 13 per cent below market value.

The two three-storey houses, with floor areas of 2,859 sq ft and 3,850 sq ft, were for sale at HK$19.8 million and HK$27.5 million respectively. The HK$6,900 psf and HK$7,150 psf pricing is below market value of HK$8,000 psf.

Secondary property prices in Chung Hom Kok are about HK$6,000 to HK$7,000 psf.

Emperor Investment general manager Elwyn Chan said a Chinese-invested company had expressed interest in

buying all five houses but the developer preferred to sell them individually.

Chan said the other three houses would be sold at market level.

Emperor Investment bought the Chung Hom Kok site for HK$60 million in 1998.

The property is the first new multi-house project launched in Island South in six years, according to Ricky Poon, executive director of sales agent Colliers.

2. Hopewell pushes on with bridge link
Staff reporter, The Standard 25 June 2003

Hopewell Holdings is pressing ahead with its HK$9 billion superhighway from Guangzhou to Zhuhai, which will be an important link to the proposed Hong Kong-Macau-Zhuhai bridge.

Hopewell chairman Gordon Wu was quoted as saying yesterday that Phase 2 of the 120-kilometre Guangzhou-Zhuhai West Superhighway, linking Shunde with Zhongshan, would be extended to Zhuhai and be completed in 2007.

The first phase, from the provincial capital to Shunde - started in 1991 - was on track for completion in 10 months, Wu told the Hong Kong Economic Journal. It was originally slated for completion next July.

He said the extension could facilitate traffic flow for the proposed bridge linking Hong Kong, Macau and Zhuhai. Wu and Hopewell officials could not be reached for comment yesterday.

Sun Hung Kai Research analyst Eva Cheng said the project completed the loop of Hopewell's highways around the Pearl River Delta.

The speeding up of the project and the extension of Phase 2 would both be beneficial to the company if the massive bridge across the Pearl estuary - strongly backed by Wu - went ahead.

Apart from the Guangzhou-Zhuhai West Superhighway, Hopewell's highway network in Guangdong province includes the 38-kilometre Guangzhou East-South-West Ring Road, 122.8-kilometre Guangzhou-Shenzhen East Superhighway, 40kilometre Shunde 105 Road and 102.4-kilometre Shunde Road.

Wu was quoted as saying the highway project would be 50-50 owned by Hopewell and the Guangdong transport department and had been approved by the Guangdong provincial government. Both parties would pay 1.5 billion yuan (HK$1.41 billion) and the rest funded by bank borrowings.

Infrastructure joint ventures accounted for 68 per cent of Hopewell's 2002 second-half earnings.

Average daily traffic of the Guangzhou-Shenzhen Superhighway rose 22 per cent from a year earlier to 148,000 vehicles, while toll revenue increased 9 per cent to 1.036 billion yuan.

The Guangzhou East-South-West Ring Road recorded average daily traffic of 39,000 vehicles and toll revenue of 108 million yuan.

3. Strict regulation of railway land urged
KENNETH KO , SCMP 25 June 2003

The KCRC last year postponed the release of a project at the Tai Wai maintenance centre on the Ma On Shan Rail line in the New Territories. Picture by May Tse

The large amount of rail-related land supply should be better regulated and clearly stated to eliminate the uncertainty clouding the residential market, says a developer.

Wharf (Holdings) assistant director Ricky Wong Kwong-yiu said the government should come up with concrete details on how to co-ordinate the supply of rail-related projects.

The tender of projects by Hong Kong's two railway companies should be regulated to avoid any sudden increase in supply, he said.

"A clear picture should be presented on rail-related supply to remove uncertainty."

Expectations are growing that the government will take further steps to support the residential market, which has remained fragile despite the nine-point stimulus measures introduced last November.

With the moratorium on land sales due to end in December, debate is heating up on whether to resume land disposals next year. The control or co-ordination of rail-related land supply is a key issue in the debate.

MTR Corp's Dream City development at its depot site in Tseung Kwan O is scheduled to be released for tender in phases.

Kowloon-Canton Railway Corp (KCRC) has an even bigger land bank, mainly along the West Rail and Ma On Shan Rail, scheduled to be tendered for development in the next few years.

KCRC last year postponed the release of two projects, at Nam Cheong Station along the West Rail and at Tai Wai maintenance centre on the Ma On Shan Rail line. The two projects involved 7.35 million square feet, or about 8,000 flats.

Should land sales resume next year, these rail projects could be put on the market for tender.

Industry experts have expressed serious concerns that large numbers of rail-related projects could be released for tender, adding new supply to the market and putting further pressure on prices.

Knight Frank valuation director Anthony Lau Chun-kuen said regulating the supply of rail-related projects would help stabilise the property market.

He said it might not benefit the rail companies to sell land or release projects under prevailing market conditions.

The further suspension of land sales might also be inadvisable, he said. The application system could act as a balancing measure, enabling land sales to be led by market forces.

Under the application system, land on the list will be released for sale after a developer agrees to pay a minimum price deemed acceptable by the government.

Developers are split on the issue.

Lui Che-woo, chairman of medium-size developer K Wah International, called for a further two-year suspension.

But Cheung Kong (Holdings) executive director Justin Chiu Kwok-hung said an across-the-board suspension of land sales would lead to unhealthy developments in the market.

Mr Wong of Wharf said industry players held differing views on land sales, a key source of revenue for the government.

The government needed to ensure a stable land supply and consider the matter from a revenue point of view.

He said the government should stick with its policy of extracting itself from the market to enable the market's healthy development.

He urged the government to step up the process of amending the tenancy ordinance to allow landlords greater flexibility in reclaiming property from tenants. This would fuel investment interest in the residential market.

The government should also consider lowering the proposed HK$6.5 million threshold for its new investment immigration policy to extend the proposal's benefits, he said.

Extending the permitted period of construction for residential projects could also help regulate supply and give developers more flexibility in a difficult market, Mr Wong said.

"Allowing extra time for completing a project can help relieve pressure on supply."

Developers have urged the government to give them an extra year to complete projects.

SK Pang Surveyors managing director Pang Shiu-kee agreed that extending the construction period would help stabilise the market because developers could slow down projects and avoid flooding the market with flats at any particular time.

Restrictions requiring developers to complete projects within four to five years were aimed at stopping developers from hoarding land, he said.

But now that the market was oversupplied, relaxing the restriction could give developers breathing space and help the market.

Mr Pang said the moratorium on land sales had failed to stop the slide in residential prices in Hong Kong, and the government might have to do more on the supply side.

But controlling the supply of rail-related projects could have serious financial implications for the railway companies, and the government had to give serious thought to balancing the interests of all.

He said that speeding up the tenancy ordinance amendment would help the residential market by attracting investors.