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1. Shui On delays IPO
Staff reporter, The Standard 15 June 2006

Mainland property developer Shui On Land disclosed late Wednesday night that it will delay its initial public offering because of what one source close to the company described as "the turmoil of the market."

Shui On aimed to raise up to HK$7.96 billion through the IPO, which opened to tepid interest from retail investors Monday.

On Sunday, Shui On Land chairman and chief executive director Vincent Lo Hong-sui had crowed: "Shui On's international tranche of offerings has received a warm welcome by investors."

The quoted price range of Shui On Land represented 13.6 to 18.3 times forecast 2006 earnings, higher than the IPOs of rivals R&F Properties and Hopson Development Holdings, which are trading at about 14 times.

Ninety percent of the offer was earmarked for international investors, while the remainder was to go to retail investors in Hong Kong .

This is at least the third property- related IPO to be delayed since the market took a turn for the worse last month.

REITs from developers Sun Hung Kai and Henderson Land were also temporarily shelved due to the recent market downturn that has erased about all of the Hang Seng Index's gains this year in part due to concerns over continued interest rate hikes.

2. Kai Tak heliport plan defies objections
Leslie Kwoh, The Standard 15 June 2006

The government has announced it will push ahead with plans to build a cross- border heliport at Kai Tak, despite opposition from members of the public and operators of heli-services.

"We're reserving a small area at the tip of the site, by the proposed cruise terminal," Deputy Secretary for Economic Development Wilson Fung Wing- yip said Wednesday. "The results of the public consultation so far have not been encouraging, but we hope the [new heliport] will meet the long-term needs of the community."

Fung said one major advantage of the location was that the new heliport and cruise terminal would be able to share customs, immigration and quarantine facilities.

He said the government will also expand two existing facilities on Hong Kong Island . A new helipad will be added to the existing one at the Macau Ferry Terminal heliport near the Shun Tak Centre.

In addition, the proposed two-pad heliport near the Convention and Exhibition Centre in Wan Chai, originally reserved for government use, will also cater to commercial domestic flights when it opens in 2008.

Fung made the remarks at a Hong Kong General Chamber of Commerce event Wednesday.

The idea was greeted with some skepticism by representatives of the Harbourfront Enhancement Committee.

"The committee is not questioning the need for a heliport, but how and where," said committee member and the chamber's senior director of business policy, Chan Wai-kwan. "But for the Kai Tak site, I'm not sure there are any supporters. The main objection is that the tip of the runway is the prettiest part of the site, and should be reserved for the public."

Heliservices, which operates helicopter services argues the site is too far away.

Christopher Buchholz, executive director of the Hong Kong Aviation Group, which runs Heliservices, said the expansion of the elevated Macau terminal heliport would bring little added benefit considering that it operates single-engine helicopters that require ground-level landings.

He suggested expanding the proposed heliport in Wan Chai from two to four pads. But Fung rejected the idea citing public interest.

3. Ho Man Tin site could attract bids up to $3b
YVONNE LIU , SCMP 15 June 2006

The Lands Department will take over the former police quarters in Ho Man Tin next year, and surveyors estimate that the site could attract bids of up to almost $3 billion if it is redeveloped into a residential project.

The Government Property Agency, which manages the empty quarters, yesterday said it planned to demolish the structure by the end of this year or early next year. The Lands Department and the Planning Department will decide on the land use.

The 46,285 square foot site, at 81 Chung Hau Road , is designated for government, institution or community uses. The government has to rezone the site for residential use if it wants to put it up for sale.

"We haven't received a rezoning request so far. We have no plans to rezone the site at the moment but will continue to review the land use," an official at the Planning Department said.

The police quarters, built in 1979, consists of 470 units and has been empty since last month. The sites around the quarters have been zoned for residential use, except for the police station.

The site will provide a total gross floor area of 416,567 square feet if the Planning Department rezones it for the development of apartment buildings. It has a plot ratio of nine, based on town planning regulations.

"The site is likely to be designated for private housing," said Albert So Chun-hin, owner of a surveyor firm under his name. "The site has potential for luxury residential development."

As most of the police quarters is in a prime area, it would be a target for developers once it goes up for sale and could generate between $1.66 billion and $2.9 billion, analysts say.

"As the quarters are located in a prime area, the site will attract developers," said Charles Chan Chiu-kwok, a director at Savills, who estimated the value of the site at $7,000 per square foot.

Cheung Kong (Holdings) bought the former Tin Kwong Road police married quarters in Ho Man Tin for $9.42 billion, or $5,476 per square foot, in 2004, well above market expectations of $6.5 billion to $7.5 billion.

Apartments at Ellery Terrace, next to the site, are priced at between $4,700 and $5,200 per square foot, according to Centaline Properties district manager Lawrence Yeung.

The latest development in the area is 1 Ho Man Tin Hill Road , a luxury project by Sun Hung Kai Properties.

The average flat price in the three-year-old building ranged between $7,500 and $8,200 per square foot, Mr Yeung said.

4. Construction Output for the First Quarter of 2006
Hong Kong Government, 15 June 2006

The total gross value of construction work performed by main contractors decreased by 5.8% in nominal terms from a year earlier to $21.9 billion in the first quarter of 2006, according to the preliminary results of the Quarterly Survey of Construction Output released today (June 15) by the Census and Statistics Department.

After discounting price changes, the total gross value of construction work performed by main contractors decreased by 6.9% in real terms over the same period.

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.

Analysed by type of construction work, the gross value of construction work performed at private sector sites totalled $6.1 billion in the first quarter of 2006, down by 9.9% in nominal terms from a year earlier. In real terms, it decreased by 10.4%. The decrease was mainly due to completion of work at some large residential building sites.

The gross value of construction work performed at public sector sites decreased by 31.5% in nominal terms from a year earlier to $4.7 billion in the first quarter of 2006. It decreased by 34.5% in real terms. The decrease was mainly due to completion of work on some public service building projects.

On the other hand, the gross value of construction work performed by contractors at locations other than construction sites amounted to $11.1 billion in the first quarter of 2006, up by 15.6% in nominal terms over a year earlier. In real terms, the increase was 17.1%. 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.

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 2006. The gross value of construction work performed for these projects amounted to $3.8 billion, down by 20.7% in nominal terms from a year earlier.

Transport projects constituted the second largest category of construction site work. The gross value of construction work performed for these projects totalled $2.4 billion, representing a decrease of 17.0% in nominal terms from a year earlier.

On a seasonally adjusted basis, the gross value of construction work performed by main contractors decreased by 1.3% in nominal terms or decreased by 1.5% in real terms in the first quarter of 2006 compared with the fourth quarter of 2005.

Table 1 shows the gross value of construction work performed by main contractors in the first quarter of 2006. Table 2 and 3 show the revised figures for the whole year of 2005 and the fourth quarter of 2005 respectively.

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.

More detailed statistics are given in the "Report on the Quarterly Survey of Construction Output, 1st Quarter 2006". Users can download this publication free of charge at the "Statistical Bookstore, Hong Kong" of the Census and Statistics Department (C&SD).

Print version of this publication is available for sale at HK$20 per issue if purchased in person at the Publications Unit of the C&SD (Address : 19/F Wanchai Tower, 12 Harbour Road, Wan Chai; Tel. : 2582 3025) or through mail order by completing and returning an order form which can be downloaded from the C&SD's website; or at HK$17 per copy if purchased online at the Statistical Bookstore and the Government Bookstore of the Information Services Department.

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 .