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1. Construction Output for the First Quarter of 2004

2. Approved Kwu Tung North Outline Zoning Plan referred back

3. Ma Tau Kok Outline Zoning Plan approved

4. Draft Sha Tin Outline Zoning Plan approved

5. Draft Cheung Chau Outline Zoning Plan announced

6. Developers home in on supply power

7. Small developers unite to battle Goliaths for cultural hub

8. Donald Tsang totting up the potential costs of border-zone development

1. Construction Output for the First Quarter of 2004
Hong Kong Government, 18 June 2004

1. The total gross value of construction work performed by main contractors decreased by 7.0% in nominal terms from a year earlier to $23.0 billion in the first quarter of 2004, according to the preliminary results of the Quarterly Survey of Construction Output released today (June 18) by the Census and Statistics Department.

2. After discounting price change, the total gross value of construction work performed by main contractors decreased by 5.0% in real terms over the same period.

3. Gross value of construction work in real terms is derived by deflating the corresponding nominal value with an appropriate price index to the 2000 price level.

4. Analysed by type of construction work, the gross value of construction work performed at private sector sites totalled $6.9 billion in the first quarter of 2004, down by 25.4% in nominal terms from a year earlier. In real terms, it decreased by 20.5%. The decrease was mainly due to completion of work at some large residential and commercial building sites.

5. The gross value of construction work performed at public sector sites decreased by 1.6% in nominal terms from a year earlier to $7.5 billion in the first quarter of 2004. Yet, it increased by 1.1% in real terms.

6. The gross value of construction work performed by contractors at locations other than construction sites amounted to $8.6 billion in the first quarter of 2004, up by 9.4% in nominal terms over a year earlier. In real terms, the increase was 7.5%. Construction work at locations other than construction sites includes minor new construction activities and renovation work at erected buildings and structures; and electrical and mechanical fitting work at locations other than construction sites.

7. Analysed by end-use category, residential building projects accounted for the largest share in the gross value of construction work performed at construction sites in the first quarter of 2004. The gross value of construction work performed for these projects amounted to $5.5 billion, down by 26.4% in nominal terms from a year earlier.

8. ="Arial, Helvetica, sans-serif">In January, the government released 17 lots on the application list after a 13-month suspension. Of those, 14 lots were residential sites.

The application list programme was frozen under the government's market-stabilisation measures in November 2002. Future sales will only be from the list, which has attracted keen ite work. The gross value of construction work performed for these projects was $2.5 billion, up by 12.2% in nominal terms over a year earlier.

10. On a seasonally adjusted basis, the gross value of construction work performed by main contractors increased by 2.0% in nominal terms or 1.1% in real terms in the first quarter of 2004 compared with the fourth quarter of 2003.

11. Table1 (text version of table 1) shows the gross value of construction work performed by main contractors in the first quarter of 2004. Table 2 (text version of table 2) and Table 3 (text version of table 3) show the revised figures for the whole year of 2003 and the fourth quarter of 2003 respectively.

12. Owing to the widespread sub-contracting practices in the construction industry, a construction establishment can be a main contractor for one contract and a sub-contractor for another contract at the same time. The gross value of construction work performed by main contractors covers only those projects in which the construction establishment takes the role of a main contractor, but not projects in which it takes only the role of a sub-contractor. However, sub-contractors' contribution should have been included in the gross value of construction work performed by main contractors for whom they worked.

13. More detailed statistics are given in the "Report on the Quarterly Survey of Construction Output, 1st Quarter 2004". The report is now available, in both hardcopy and softcopy (in PDF format), for sale at HK$14 and HK$10.5 respectively. It can be purchased online at the "Statistical Bookstore, Hong Kong" (http://www.statisticalbookstore.gov.hk), where purchasers can enjoy a special 25% discount from now until 31 July 2004. Hardcopy can be purchased through mail order by completing and returning an order form which can be downloaded from the C&SD's website (http://www.info.gov.hk/censtatd/eng/prod_serv/forms_index.html), or in person at the Publications Unit of the C&SD (Address: 19/F, Wanchai Tower, 12 Harbour Road, Wan Chai; Tel: 2582 3025).

14. For enquiries about the survey results, please contact the Construction and Miscellaneous Services Statistics Section of the Census and Statistics Department at telephone no. 2805 6426 or email building@censtatd.gov.hk.

2. Approved Kwu Tung North Outline Zoning Plan referred back
Hong Kong Government, 18 June 2004

The Chief Executive in Council has referred the approved Kwu Tung North Outline Zoning Plan (OZP) to the Town Planning Board for amendment.

"Amendments to the approved OZP are necessary to reflect latest land use proposals in the Kwu Tung North area", a spokesman for the Town Planning Board said today (June 18).

The Kwu Tung North OZP incorporating the amendments will be exhibited for public inspection in accordance with the provisions of the Town Planning Ordinance.

The Kwu Tung North OZP was last approved by the Chief Executive in Council on February 22, 2000.

3. Ma Tau Kok Outline Zoning Plan approved
Hong Kong Government, 18 June 2004

The Chief Executive in Council has approved the Ma Tau Kok Outline Zoning Plan (OZP).

"The approved OZP provides a statutory land use planning framework to guide development and redevelopment within the Ma Tau Kok area," a spokesman for the Town Planning Board said today (June 18).

The Planning Scheme Area (the Area) of the Ma Tau Kok OZP covers about 139 hectares of land in Central Kowloon. It is bounded by Tung Tau Tsuen Road and Tung Tsing Road to the north; To Kwa Wan Road and Yuk Yat Street to the east; Ngan Hon Street and San Lau Street to the south; and Tin Kwong Road to the west. The Area is one of the earliest developed urban areas in Kowloon, which has been substantially developed for public housing, private residential and industrial uses.

Most of the existing private and public residential developments in the Area, covering about 44.2 hectares of land, fall within the "Residential (Group A)" ("R(A)") zone. The Ma Tau Kok Gas Works (North Plant) site at To Kwa Wan Road and Ma Tau Kok Road and the former Tin Kwong Road Police Married Quarters site at Tin Kwong Road and Sheung Shing Street are proposed for private residential use upon redevelopment.

About 8.9 hectares of land is zoned "Residential (Group B)" ("R(B)"), including mainly the existing and proposed medium-density residential developments along Argyle Street, Prince Edward Road West and Grampian Road.

To encourage the phasing out of existing obsolete industrial uses, industrial sites at Yuk Yat Street, Chi Kiang Street, Sheung Heung Road and To Kwa Wan Road, about 3.2 hectares of land, are zoned "Residential (Group E)" ("R(E)").

In addition, the sites bounded by Sung Wong Toi Road, Kowloon City Road, Ma Tau Kok Road and To Kwa Wan Road, covering about 5.7 hectares of land, are zoned "Comprehensive Development Area" ("CDA") to facilitate comprehensive redevelopment for residential uses with retail and Government, institution or community (GIC) facilities, as well as to phase out existing industrial activities.

An existing hotel at Sa Po Road and two existing industrial buildings at Ma Tau Wai Road are zoned "Commercial" ("C") and are intended to provide for office, retail and hotel uses.

To provide land for various GIC facilities to serve the needs of residents in the Area and those in the adjoining areas, about nine hectares of land is zoned "Government, Institution or Community" ("G/IC").

To provide land for both active and passive recreational uses, about 21.8 hectares of land is zoned "Open Space" ("O"). About 1.5 hectares of land is zoned "Other Specified Uses" ("OU") for the Hong Kong Softball Association Recreation Ground at Tin Kwong Road and the Kowloon City Plaza at Carpenter Road.

The approved Ma Tau Kok OZP No. S/K10/18 is available for public inspection during normal office hours at the Secretariat of the Town Planning Board, the Kowloon District Planning Office and the Kowloon City District Office.

Copies of the approved OZP are available for sale at Map Publications Centres in North Point and Yau Ma Tei. The electronic version of the plan can be seen on the Town Planning Board's website at http://www.info.gov.hk/tpb.

4. Draft Sha Tin Outline Zoning Plan approved
Hong Kong Government, 18 June 2004

The Chief Executive in Council has approved the draft Sha Tin Outline Zoning Plan (OZP).

"The approved OZP provides a statutory land use planning framework to guide the development and redevelopment within the Sha Tin area," a spokesman for the Town Planning Board said.

The Planning Scheme Area (the Area), covering about 2,777 hectares, lies at the bottom of the Sha Tin Valley which is separated from Kowloon by a range of hills, dominated by Lion Rock and Sugar Loaf Peak.

The Area is a developed New Town with a large portion of land zoned "Residential (Group A)", "Residential (Group B)" and "Residential (Group C)" with an area of about 235 hectares, 204.9 hectares and 0.95 hectares respectively, for various types of residential developments.

The existing town centre, which is partly zoned "Commercial/Residential" and partly zoned "Commercial", covering 14.6 hectares and 6.7 hectares respectively, is centrally located between the existing Kowloon-Canton Railway (KCR) Sha Tin Station and Shing Mun River.

In order to encourage development or redevelopment of relatively large sites in a comprehensive manner with adequate provision of infrastructure and community facilities, four sites are zoned "Comprehensive Development Area" ("CDA") and "Comprehensive Development Area (1)" ("CDA(1)"), about 4.6 hectares and 12.7 hectares of land respectively.

To meet the indigenous villagers' demand for Small Houses, a total of 190.5 hectares of land is zoned "Village Type Development".

To serve the needs of the local as well as district population, a total of 293.2 hectares of land is zoned "Government, Institution or Community". In addition, a total of 259 hectares of land is zoned "Open Space" for active and passive recreational uses.

Sites allocated for various specific uses such as Sha Tin Race Course, Fu Shan Crematorium and Columbarium, the columbarium development at Po Fook Hill, Tao Fong Shan Christian Cemetery, KCR Sha Tin Station, covering about 203.6 hectares of land, is zoned "Other Specified Uses" ("OU").

The Shek Mun Industrial Area is mainly zoned "OU" annotated "Business" and "Business (1)" for general business uses. A total of 52.5 hectares of land in the Fo Tan, Yuen Chau Kok and Tai Wai Industrial Areas is zoned "Industrial" for general industrial uses.

The remaining area, about 982.9 hectares of land, covering mainly the vegetated hill slopes and knolls is zoned "Green Belt" to define the limits of urban and sub-urban development, to contain urban sprawl and to provide passive recreational outlet.

The approved Sha Tin OZP No. S/ST/20 is now available for public inspection during normal office hours at the Secretariat of the Town Planning Board, the Sha Tin, Tai Po and North District Planning Office, the Shatin District Office and the Sha Tin Rural Committee.

Copies of the approved OZP are available for sale at Map Publications Centres in North Point and Yau Ma Tei. The electronic version of the plan is viewable from the Town Planning Board's website (http://www.info.gov.hk/tpb).

5. Draft Cheung Chau Outline Zoning Plan announced
Hong Kong Government, 18 June 2004

The Town Planning Board today (June 18) announced the publication of a new draft Outline Zoning Plan (OZP) for the Cheung Chau area.

The draft OZP covers a total area of about 307 hectares, comprising the island of Cheung Chau with a land area of about 244 hectares and the 63-hectare Cheung Chau Typhoon Shelter.

The general planning intention is to preserve the rural character, car-free environment and the natural landscape of the island. The existing low-rise low-density character would be maintained and additional outlets for countryside recreation are provided.

The general urban design concept of the plan is to concentrate commercial uses and major community facilities around the ferry pier with the higher-density developments in the central lowland and the lower-density developments on the upland and in the peripheral and more visually prominent areas. Waterfront promenades are provided and a comprehensive network of footpath/emergency vehicular access would connect various parts of Cheung Chau.

About 0.3 hectare of land is zoned "Commercial" for commercial developments, which include Warwick Hotel and an existing commercial building.

Some 8.2 hectares of land are zoned "Residential (Group A)" which cover two rural public housing estates and a private residential development near Cheung Chau Park.

About 12.5 hectares of land are zoned "Residential (Group C)" for low-rise, low-density residential developments compatible with the rural character of Cheung Chau. Another 2.2 hectares of land are zoned "Residential (Group D)" primarily intended for improvement and upgrading of the existing village blocks which are generally obsolete and lack adequate provision of infrastructure and utility services.

To provide land for the retention of the existing village areas which mainly concentrated in the central lowland of Cheung Chau, some 29.9 hectares of land are zoned "Village Type Development".

About 17.8 hectares of land are zoned "Government, Institution or Community" to provide land for Government, institution or community facilities serving the needs of the local residents and/or a wider district.

In addition, about 11.7 hectares of land are zoned "Open Space" and 8.4 hectares are zoned "Recreation" to provide land for outdoor open-air public space and recreational developments for the use of the general public.

About 13 hectares of land designated for specific uses such as beach-related leisure uses, cemetery, sewerage treatment works, ice making plant, shipyard and ship repairing workshop, and pier are zoned "Other Specified Uses".

Some 111.5 hectares of land covering the hill slopes and upland with natural vegetation, and 22.7 hectares of the natural coasts and sensitive coastal natural environment, are zoned "Green Belt" and "Coastal Protection Area" respectively.

Development restrictions on plot ratio/gross floor area, site coverage and building height are stipulated in the Notes in order that developments/redevelopments will be in keeping with the rural character of Cheung Chau and will not overtax the limited access and infrastructure provision.

The draft Cheung Chau OZP No. S/I-CC/1 is available for public inspection during normal office hours at the following locations:

* Secretariat of the Town Planning Board, 15th Floor, North Point Government Offices, 333 Java Road, North Point;

* Lantau and Islands District Planning Office, 15th Floor, Sha Tin Government Offices, 1 Sheung Wo Che Road, Sha Tin;

* Islands District Office, 20th Floor, Harbour Building, 38 Pier Road, Central;

* Islands District Office, Mui Wo Sub-office, Ground Floor, Mui Wo Government Offices, 2 Ngan Kwong Wan Road, Mui Wo; and

* Cheung Chau Rural Committee, 2 Church Road, Cheung Chau.

Any person affected by the draft Cheung Chau OZP can submit a written objection to the Secretary of the Town Planning Board on or before August 18, 2004.

Copies of the draft Cheung Chau OZP are available for sale at Map Publications Centres in North Point and Yau Ma Tei. The electronic version of the plan can be viewed from the Town Planning Board's website at http://www.info.gov.hk/tpb.

6. Developers home in on supply power
Eli Lau, The Standard 18 June 2004

Developers are likely to gain more pricing power when supply and demand strike a balance in the next six to nine months.

Lower total future completions is expected to go some way towards offsetting the weak demand caused by negative economic forces, Morgan Stanley analyst Kenny Tse said.

In its latest research on developers, the securities house estimates total private completions for 2004-2006 will average 23,000 flats - 40 per cent below the peak of 2002.

``Given the current decent affordability and the abolition of Home Ownership Scheme sales, it is realistic to expect some demand shift to the private housing market from the public market.

``We believe the much lower total supply will go a long way in offsetting the demand weakness caused by negative demographic and economic forces, such as low population growth, high unemployment and absence of material wage growth in the medium term,'' Tse said.

The firm said developers who have larger volumes to sell are more likely to produce earnings surprises, helped by potential margin improvement.

``Since we think developers will soon need to sell new projects in order to lock in earnings for 2005, the increase in supply-in-sale may cap property price advances in the short-term,'' said Tse.

The analyst, nevertheless, expected developers to regain more pricing power towards end-2004 or early 2005.

Sun Hung Kai Properties is expected to gain market share at the expense of its peers, with an estimated market share for 2004 to 2006 of 25 per cent from the current 15 per cent to 20 per cent.

Cheung Kong (Holdings) would remain the second biggest producers of apartments, although market share would drop slightly to 14 per cent during the same period.

7. Small developers unite to battle Goliaths for cultural hub
CHLOE LAI and QUINTON CHAN, SCMP 18 June 2004

Several smaller developers are believed to have joined forces to compete with large industry players to vie for the controversial West Kowloon Cultural District project.

Industry sources say the smaller developers - some of whom have been highly critical of the government's single-contract approach to the development of the arts hub - will team up to bid for the project when submissions close tomorrow.

"Even though we oppose the government's way of handling the project, we have to team up to bid for it, as the project itself is massively profitable," one source said. "We are somehow forced to go for it."

He said that once built, the value of the development would be at least $60 billion.

Only two developers have welcomed the single-contractor arrangement. Some small developers had decided not to join the race because they thought forming a long-term partnership would be risky, especially if the economy slumped, the source said.

"It is easy for us to just bid, build and sell, but forming a joint venture for 15 to 20 years is very difficult, especially when the economic cycle goes down," he said.

The probable bidders include Swire Pacific, Henderson Land Development, Wharf (Holdings) and Hongkong Land.

Cheung Kong (Holdings) and Sun Hung Kai Properties are believed to be either bidding individually or also forming a venture to compete with rivals.

Many industry players have called on the government to make the selection process fully transparent.

"All the bidding proposals, including their financial arrangements and business plans, should be open for public scrutiny," one source said.

The source said many developers were highly critical of, and sceptical about, the glass canopy stretching over 55 per cent of the 40-hectare site in Lord Foster's winning design for the district.

"The canopy is going to be incredibly big and expensive. It will severely restrict development opportunities," he said. "If you put the canopy on Victoria Harbour, it would stretch from the Hong Kong Cultural Centre in Tsim Sha Tsui to the Convention and Exhibition Centre in Wan Chai."

Twenty-nine per cent of the site will be set aside for arts and cultural development, while the remainder will be used for commercial and residential developments and government facilities.

The developer awarded the construction rights will also manage the development for 30 years.

8. Donald Tsang totting up the potential costs of border-zone development
CHEUNG CHI-FAI, SCMP 18 June 2004

The development of a 100-hectare border zone between Shenzhen and Hong Kong has to be financially viable to meet construction costs estimated at $2 billion, the chief secretary said yesterday.

Donald Tsang Yam-kuen said after a meeting with Shenzhen Mayor Li Hongzhong that both sides recognised the potential of the site near Lok Ma Chau. But he noted there were transport, infrastructure and environmental-protection constraints facing the development.

Mr Tsang said he would co-ordinate further studies into potential uses of the site with his Shenzhen counterpart. A joint team consisting of officials from the Housing, Planning and Lands Bureau and corresponding Shenzhen authorities will also be formed.

"We believe there is potential for development [of the site], but there are huge development costs involved," Mr Tsang said. "We have to look at the feasibility of different proposals and find one which could meet development costs and be financially viable."

Mr Tsang said the proposals would also have to offer economic benefits to both sides. Mr Li said he "completely supported the basic principles" outlined by Mr Tsang.

The government estimates $2 billion will be needed to provide basic infrastructure at the site and to remove and treat more than 1 million cubic metres of contaminated mud.

Several proposed uses have been put forward for the site, such as a free-trade zone which mainlanders could enter without a visa, an industrial zone for high value-added products and a convention-cum-commercial centre.

The proposal was first touched on in the Planning Department's 2030 planning study. An earlier public consultation indicated that most people wanted to preserve the site as a conservation area.