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1. Facelift for Ocean Park

2. Laying good foundations

3. Meinhardt buys Mouchel Asia unit

4. Swire challenges blueprint with 'living green roof'

5. Mong Kok shopping mall sold for $470m

6. Far East sells Mongkok retail centre

1. Facelift for Ocean Park
Pamela Pun, The Standard 20 July 2004

Facing serious threats from intensifying regional competition, Ocean Park aims to remake itself as a world-class theme park focused on marine life to try to attract tourists from across Southeast Asia, chairman Allan Zeman said.

Three American designers who designed Knott's Berry Farm, Universal Studio and Disneyland are now working on an expansion plan, Zeman said during a break at the Hong Kong Business Sector Seminar on Exploring Pan-Pearl River Delta Business Opportunities.

``It will be a world-class education and entertainment theme park based on marine life. This is what Disneyland doesn't have,'' he said yesterday.

Ocean Park's competition is formidable, with amusement parks of various kinds vying for as many as 415 million visitors projected for 2020, up from 121 million in 2001, according to news reports.

Besides the Disneyland due to open on Lantau at the end of 2005, Macau is building a Fisherman's Wharf entertainment district, and Beijing is erecting the world's tallest ferris wheel at 210 metres, complete with restaurants, a theatre and other entertainment at the base.

In Singapore, plans are under way to build a US$400 million (HK$3.12 billion) theme park on Sentosa Island. Part of that is to be a Ripley's Believe It Or Not! facility that the company says is the biggest in the world. In addition, Australia's Village Roadshow is considering putting US$30 million into a water-based theme park at Sentosa.

Half of the world's top 10 parks are in Asia, bringing in up to 68 million visitors annually.

In its effort to compete, Ocean Park in Aberdeen is projected to undergo a complete facelift in two phases over about six years. It is slated to have more sea animals and shows, a new kids' world, a through-mountain train called ``Funicular'', a water world, new theme restaurants and retail shops, and possibly a world based on the Finding Nemo movie.

So far the continuing expansion proposal ``is looking very exciting and pretty completely workable'', Zeman said, adding that he has briefed the SAR government and has received a positive response. A formal proposal will be presented to the government in the last quarter.

Zeman said he is now working on the business part of the expansion plan. Bonds and an initial public offering for the new Ocean Park are not ruled out. He would not give cost figures.

If things go smoothly, construction is expected to kick off in two years, he said, with phase one scheduled to begin operation in 2008 and phase two to open in 2010.

``We are lucky to be in the proximity of the mainland] which is a great potential market],'' he said.

In his speech at the seminar, Zeman said ``tourism is the easiest sector for integration in the Pan-PRD''. Good transportation, he said, is key to developing tourism in the region.

``With a sophisticated transportation system and infrastructure already in place and further improvements planned ahead, the Pan-PRD will have a huge potential to develop tourism.''

How to package the tourism resources is also very important. He suggested each of the nine provinces in the delta develop strong points and sell them.

Zeman said the opening of Disneyland next year and a revamped Ocean Park will change the future demographics of incoming tourists, which will help to bring family visitors, something Hong Kong has never really accommodated.

Therefore, family packages are needed not only for restaurants but hotels as well.

As an example, Ocean Park has two kinds of tourists from China - tour groups which spend three hours in the park without spending much, and independent mainland families who spend at least six hours there. The park is now gearing up to serve such families, Zeman said.

``Hong Kong itself is also changing the way it does business to service this type of tourist,'' he added.

If 5 per cent of the people in the Pan-PRD come to Hong Kong, that represents 22.5 million visitors. The Hong Kong Tourism Board is forecasting 11 million mainland visitors this year.

2. Laying good foundations
Danny Chung, The Standard 20 July 2004

A casual observer could be forgiven for thinking that renewed optimism in the property market would throw a lifeline to the construction industry, especially foundation contractors.

But any grounds for feeling upbeat would be misplaced, according to Yves Chiffoleau, managing director at top foundation specialist Bachy Soletanche.

``I would say that activity at the moment is lower,'' he said. It was also ``too early'' to start seeing an increase in inquiries from property developers about future projects.

Chiffoleau remained disappointed about the apparent delay in rolling out the Kowloon-Canton Railway Corporation's Kowloon Southern link between Tsim Sha Tsui and Nam Cheong station in Sham Shui Po.

Though overall Chiffoleau remained optimistic about the economy and future prospects.

``The construction industry cannot remain depressed for long when growth indicators in Hong Kong are so promising. We may have a difficult time ahead of us in the short term, but it is difficult to say just how long it will last. There are also good prospects for the future.''

Bachy Soletanche was established in Hong Kong in 1973 specialising in geotechnical and foundation engineering. During the past 31 years it has worked on some of the most prestigious projects in Hong Kong. These include the HSBC headquarters, the Cultural Centre, West Kowloon Expressway, the eastern and western harbour tunnels, the Disney theme park, One and Two International Finance Centre, plus schemes for the two rail corporations.

Although there is little new work, this has not stopped Bachy from continuing to offer technical know-how and construction expertise to architects and engineers during the design and development of projects.

Outlining the reasons for this approach, Chiffoleau said: ``We like to know what work is coming out and by working upstream, we have a good understanding of clients requirements when the projects eventually come out to tender.'' With the industry in its current troubled state - construction output dropped 7 per cent in the first quarter to HK$23 billion - Chiffoleau said: ``It will be difficult to maintain our recent level of turnover in Hong Kong''.

Other foundation contractors would probably agree. Statistics from the Census and Statistics Department show that piling and related foundation work dropped from a peak of almost HK$10 billion in 1997 to only HK$4.5 billion in 2003.

Bachy Soletanche believed it fared better than most foundations contractors because of its strong reputation. The high standards of work are maintained largely because it mainly employs its own resources.

``Our policy is that when you subcontract work, you are not directly in control. We like to manage the work ourselves,'' he said.

The increased use of partnering, where clients and contractors work together to resolve problems, got a big thumbs up from Chiffoleau who said ``it is an arrangement that we like''.

Bachy Soletanche used a full partnering approach with Balfour Beatty and joint venture partner Zen Pacific during construction of the KCRC's Nam Cheong station on the West Rail scheme.

The company has also been involved in projects where partnering principles were an essential part of the main contract between the client and the contractor.

Chiffoleau, as a keen hiker, is very close to environmental issues and is willing to introduce some technology from Bachy's French headquarters. These include ``environmentally friendly piling'' such as stone columns for low rise building foundation.

China has not escaped Bachy's attention either. ``We started in China in 1986 and our involvement there has been steady and progressive,'' Chiffoleau said.

So far Bachy Soletanche has completed eight projects. ``We feel that there are a lot of challenging projects coming out, where our expertise may help. We are saying that if somebody needs some assistance, then we are ready,'' he said.

``Bachy Soletanche is currently involved in fruitful discussions to co-operate with major a Chinese contractor.''

3. Meinhardt buys Mouchel Asia unit
Keith Wallis, The Standard 20 July 2004

Meinhardt, the Australian engineering and planning group, has expanded its expertise with the purchase of Mouchel Parkman Asia, the Hong Kong-based subsidiary of Britain's Mouchel Parkman.

Laurie Smith, Meinhardt (Hong Kong) managing director, said the deal was inked at the end of last week.

Helen Cochrane, a Mouchel Parkman Asia director, added that the acquisition is likely to be finalised by the end of this month.

Smith declined to give financial details of the purchase but said it would broaden Meinhardt's scope of work to cover environmental engineering and strengthen its structural engineering experience.

Meinhardt specialises in building construction, including civil, structural and building services design. Its projects include part of the design of the MTR Corp's Tseung Kwan O line and the design of mechanical and electrical services in One International Finance Centre.

Meinhardt is also leading one of the design groups which have applied to tender for the MTR Corp's Tseung Kwan O South station.

Mouchel Parkman Asia focuses on civil engineering and environmental engineering projects. It has a long-standing deal to monitor the marine contaminated mud pits at East Sha Chau. The firm also designed and is overseeing the widening of part of Castle Peak Road.

``It's a good fit, with virtually no overlap of services,'' he said.

Cochrane said the acquisition only covers Mouchel Parkman Asia in Hong Kong.

Other regional offices in Bangkok and Singapore would remain with the British parent company. Carmine Siu, managing director of Mouchel Parkman Asia, would become a director of Meinhardt (Hong Kong), as would Cochrane.

All other staff, including Martin Harris, Mouchel Parkman Asia technical director, would remain in their present positions.

Smith said there would be no redundancies because there is virtually no duplication of services and roles.

Meinhardt has about 300 staff in Hong Kong, while Mouchel Parkman Asia has 60 office-based staff and about 150 working on site.

4. Swire challenges blueprint with 'living green roof'
PEGGY SITO, SCMP 20 July 2004

A radical proposal from Swire Properties that dispenses with the idea of a giant glass canopy for the proposed West Kowloon Cultural District project may pose a challenge to the government, which had insisted on the canopy in the first place.

The canopy, suggested by architect Sir Norman Foster, is a stipulated feature in the proposed cultural hub, which will occupy 40 hectares of reclaimed land on the West Kowloon waterfront.

Last week, Swire presented a proposal that offered an alternative plan, replacing the idea of a glass, steel and concrete canopy with the concept of a 30-hectare "living green roof ", with trees and foliage.

The government's intention of awarding the project to a single developer who would incorporate the glass canopy in the building plan has been criticised by smaller developers, who would like to see the project split so that a number of players could take part in creating the cultural hub.

The Swire proposal is seen by many as potentially awkward for the government.

If the government decided to grant Swire the contract, it would be as good as admitting that the initial canopy idea was not wise, said Pang Shiu-kee, head of SK Pang Surveyors.

And if the government accepted Swire's canopy-free proposal, it would have to explain why it was giving the $24 billion contract to one developer rather than splitting the project into several phases for a range of developers, analysts said.

Chief Secretary Donald Tsang Yam-kuen said the glass canopy was one of the main reasons the government had decided to entrust the project to a single consortium that would be responsible for maintaining the site for 30 years.

"If the government wants more than one developer, [our] plan is technically feasible," Gordon Ongley, Swire Properties director and general manager, said last week.

Swire Properties is a supporter of the Real Estate Developers' Association, which has asked that the project be divided into phases so that big and small developers can have a share in it.

Mr Pang of SK Pang Surveyors believed Swire Properties had a slim chance of winning the project. He said other developers who had submitted bids that included the required canopy would object if the Swire proposal was accepted.

Five bids were received before the June 19 deadline for submissions. Henderson Land Development said its proposal included the giant canopy.

A consortium formed by Sino Land, Wharf (Holdings), Chinese Estates Holdings and K. Wah International has proposed building a park covered by more than 100 small canopies.

A consortium formed by Sun Hung Kai Properties and Cheung Kong (Holdings) declined to discuss its proposal, and another bidder was unavailable for comment on its proposal.

Swire has requested that the government display all proposals for public consultation.

"Let the government make the decision based on the knowledge of what the community expresses," Mr Ongley said last week.

Environmental groups endorse having the proposals put up for public display.

"The government should be transparent, making sure that the winning proposal is in the best interests of the public," said Lister Cheung Lai-ping, chief executive of the Conservancy Association.

"Swire must have a strategy to play such a game. It is well planned," Ms Cheung said.

5. Mong Kok shopping mall sold for $470m
Raymond Wang, The Standard 20 July 2004

Far East Consortium International, a real estate and hotel investor, has sold a retail property in Mong Kok for HK$470 million, a source close to the company said.

The deal will generate a profit of HK$250 million, the source said. In comparison, the company's full-year net profit for the year ended March was HK$149 million.

Trading in Far East shares was suspended yesterday pending an announcement. The stock closed at HK$1.50, up 3.45 per cent.

Sources said Far East had agreed to sell a six-floor shopping centre at the junction of Portland Street and Nelson Street to a local investor at an average price of more than HK$10,000 per square foot.

The 46,070 sq ft property had been held by the company for about three decades, with prevailing rental yields of about 5 per cent.

``As retail property prices have risen substantially over the past year, the company has decided to cash in after it was approached by potential buyers,'' the source said. Far East Consortium declined to comment.

New retail supply will be limited over the next couple of years, but demand will keep climbing amid the tourism boom, market analysts said.

According to data recently released by the Rating and Valuation Department, annual supply in 2004 and 2005 will be around 800,000 sq ft, well below long-term averages of more than 1.8 million sq ft. Forecast supply levels will be lower than long-term average take-up by about 14 per cent.

FPDSavills (Hong Kong) senior director of research and consultancy Simon Smith said an even greater supply shortfall will occur in core areas.

"Of all the proposed new shopping centres we have identified over 2004 to 2006, only two, namely Langham Place in Mong Kok and the Hanoi Road development in Tsim Sha Tsui, are located in the traditional core shopping nodes,'' Smith said.

Given current projections of sharply higher tourist numbers combined with a domestic consumer recovery, retail rents would come under sustained upward pressure, FPDSavills (Hong Kong) senior director of retail Nicholas Bradstreet said.

6. Far East sells Mongkok retail centre
KENNETH KO and SANDY LI, SCMP 20 July 2004

Far East Consortium International has sold a six-level retail centre in Mongkok for about HK$470 million - the sector's second-biggest property sale this year.

The transaction, part of the firm's move to dispose of non-core properties to fund mainland expansion, reflects continued confidence and investment interest in shops in prime locations.

The biggest retail property deal was sealed in May with the sale of shops at 8 Russell Street, Causeway Bay, for HK$525 million.

Far East has agreed to sell its 46,000 sqft retail centre - at the Far East Bank Mongkok Building - in Portland Street to an independent buyer.

Deputy chairman David Chiu Tat-cheong said the group would generate a profit of HK$250 million to $270 million from the sale, which would be booked for the 12 months to March next year.

With the property sale and the proceeds from its US$60 million convertible bond issue earlier this year, he said the company would have HK$1 billion cash on hand.

The strong cash flow will be used to fund its mainland property development plans and continued expansion in three-star hotel operations in Hong Kong.

Mr Chiu said the group would sell its non-core properties in Singapore and Malaysia and would consider selling all marketable securities held in its books for trading or investment purposes.

Last week, Far East reported a HK$149 million profit for the year to March, due to good returns from its Shanghai townhouse development. This compares with a $124.4 million loss the previous year.

Mr Chiu said the group had signed a memorandum of understanding to undertake a similar townhouse project in Chengdu and would continue to explore projects in other major cities.

On the Mongkok property deal, he said the ground floor shops, with a floor space of 9,000 sqft, were selling at an average of HK$30,000 per square foot. Shops above the ground floor commanded about $6,000 per square foot. The investment yield for the deal was estimated at 4 to 5 per cent.

Stanley Poon Chi-ming, retail department general manager for Centaline Property Agency, said investment interest in shops in Mongkok, especially around Shanghai and Portland streets, had increased because of the positive spill-over effect from the nearby Langham Place office-retail-hotel development.

He said Langham Place, developed by Great Eagle, had transformed the area and attracted many investors to purchase quality shops in anticipation of rental increases. Far East Bank Mongkok Building is next door to Langham Place, making it a choice investment.