SKYLINE Technologies -- News Update (28 June 2006 )

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1. MTR Welcomes Decision to Introduce Rail Merger Bill
MTR Press Release, 28 June 2006

MTR Corporation welcomes the Government's decision to introduce the Rail Merger Bill into the Legislative Council on 5 July 2006. It marks an important step forward inthe process to merging the MTR and Kowloon-Canton Railway (KCR) systems.

Dr Raymond K F Ch'ien, Chairman of MTR Corporation, hopes the Legislative Council will support the Rail Merger Bill as the merger proposal is a fair and balanced package that is beneficial to passengers, shareholders and staff of the two Corporations. “Immediately after the merger, Hong Kong‘s traveling public will be the first to benefit as passengers will enjoy fare reductions,” said Dr Ch'ien.

If the Rail Merger Bill is passed by the Legislative Council, the proposed merger transaction will be presented to the MTR Corporation's minority shareholders for pproval.

The Corporation will continue to work closely with the Government, KCRC, and the Legislative Council to ensure a smooth merger process.

2. Officials reject cruise terminal proposals
DENISE HUNG , SCMP 28 June 2006

The government has rejected six proposals by developers for a temporary cruise terminal, effectively delaying the building of the facility for two years.

Sources familiar with the project said the government would instead build a permanent terminal itself at Kai Tak under the draft blueprint unveiled last week for developing the former airport site.

A senior government source said the proposals, submitted in response to an invitation for expressions of interest last year, were rejected because of concerns about their feasibility.

"There are questions surrounding the feasibility of each of the six proposals and they will not be worked out in the near future," the source said. As a result, the government had opted to speed up the permanent cruise terminal project.

The move will spare the government from getting entangled with the consortiums, the source said.

The temporary facility was intended to meet the city's demand for two to four years from 2009. Under the Kai Tak plan, the terminal will not be in operation until 2011.

Those who submitted expressions of interest include developers Cheung Kong (Holdings), Henderson Land and Sino Land . Their proposed locations were close to their properties or assets.

Another government official said it would be easier politically to go straight into developing a government facility. "[Otherwise] the government would be criticised for colluding with whichever developer's proposal was adopted," he said.

The business community has been appealing for a new cruise terminal for more than 10 years and urging the government to make a decision as swiftly as possible.

The government had said it would consider all suggestions, but if none was satisfactory, it would proceed with Kai Tak.

Democratic Alliance for the Betterment and Progress of Hong Kong lawmaker Chan Kam-lam said: "It does not matter whether the terminal is built by the government or through public tender. Kai Tak is a good location for the cruises."

"The tourism industry has longed for a world-class cruise terminal for many years and Kai Tak is the only place with expansion potential for the long term," the government said in the Kai Tak planning review released last Friday.

The government said the Kai Tak terminal would have two berths for cruise ships over 50,000 tonnes.

The Town Planning Board is expected to endorse the Kai Tak blueprint by early next year, with construction due to begin in 2010.

But the government plans to fast track the terminal project. "Our objective is to have a cruise terminal at Kai Tak in 2011," the source said.

According to a cruise industry report, the number of passengers in Northeast Asia is expected to grow from an estimated 440,000 in 2005 to 720,000 by 2010.

Legislators were united yesterday in calling for better connections between a redeveloped Kai Tak and neighbouring districts to ensure the plan revitalises the whole of southeast Kowloon .

More underground shopping arcades and better pedestrian footbridges were among the suggestions put forward to better integrate Kai Tak with its neighbourhood, including Kowloon City , Kowloon Bay and To Kwa Wan.

The Liberal Party's Selina Chow Liang Shuk-yee, chairwoman of the Hong Kong Tourism Board, told the Legislative Council's planning, lands and works panel it would not be sensible to segregate Kai Tak from the economic activities of old districts.

She also raised concerns a proposed cruise terminal, which would take up an 800-metre stretch of the former airport runway, might not be big enough to cope with the growth in tourist traffic.

Legislators also challenged the suggested harbourfront location for a 23-hectare stadium complex.

Patrick Lau Sau-shing, who represents the architectural, surveying and planning sector, said the stadium could be as big a fiasco as the Cultural Centre.

"It will be such a waste of the sea view because, like the Cultural Centre, people go to the stadium to watch what is inside the building instead of what is outside," Dr Lau said. "The harbourfront land should be allocated for residential or commercial development."

4. Premium slashed for KCRC project in Tuen Mun
YVONNE LIU , SCMP 28 June 2006

The Lands Department has slashed the land premium for Kowloon-Canton Railway Corp's development near Tuen Mun station by 28 per cent to about $3.9 billion following developers' rejection of the tender last year.

The firm was expected to put the project up for tender at a new price of $2,500 per square foot by the end of this week, sources said.

The cut in the land premium reflects the sharp fall in flat prices in the past year as the property market slowed amid rising interest rates.

"The property market last year was more [robust]," surveyor Albert So Chun-hin said. "It is reasonable to see a cut in the land premium."

He said the project's prime location meant its retail potential exceeded that of its residential segment.

"[The development could include] a three-storey shopping mall valued at $5,000 per square foot," Mr So said. "Developers would make a reasonable profit if the average flat price exceeded $3,500 per square foot. I expect the project will lure back developers."

Other property specialists concurred. Although units in the area were selling below $3,000 per square foot, "flat prices in this project could reach $4,000 per square foot", KWah Real Estate property manager Quinly Wan Tsz-mei said. "We are interested."

Henderson Land Development general manager Tony Tse Wai-chuen said: "The average flat prices in Tuen Mun have [stayed] at $2,000 per square foot for years. I think the premium is still high."

This time, 12 developers including Cheung Kong (Holdings), Henderson, Wheelock Properties, Hang Lung Properties and Nan Fung Development have shown interest in the tender.

The 2.65-hectare site will have 1,924 units with a gross floor area of 1.55 million sqft.

5. KCRC pleased with the introduction of Rail Merger Bill to LegCo
KCRC Press Release, 28 June 2006

The Kowloon-Canton Railway Corporation (KCRC) is pleased that the Government announced today the decision to introduce the Rail Merger Bill into the Legislative Council on 5 July 2006.

A spokesman of the KCRC said this represents an important step forward in the implementation of the rail merger.

The Corporation on its part has been working and will continue to work closely with the Government and the MTR Corporation Limited in all aspects of the work in achieving a smooth integration of the two railway systems.