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1. Arts centre proposed for Central heritage site
SIMON PRITCHARD and JANE MOIR, SCMP 30 July 2004

A group of at least five established families is proposing to convert the Central Police Station, Victoria Prison and the former Central Magistracy into a massive arts complex, funded by $500 million in donations.

The Hotung family is understood to be leading the group that includes at least four other third- or fourth-generation Hong Kong families to renovate the 163-year-old Victoria Prison into a visual and fine arts academy run by the University of Hong Kong, with the remaining site to be transformed into a museum, gallery and crafts centre.

The group pitched the idea to Chief Executive Tung Chee-hwa and Financial Secretary Henry Tang Ying-yen, and felt it had outline approval for the project, with backing from the culture, tourism and education sectors, according to a source close to the group.

"The decision seems to have been made not to simply sell to the highest bidder, since commitments made on heritage sites are often not followed through," the source said.

In all, 16 buildings would be punctuated by a glass corridor running through the site, connecting to a series of piazzas and cafes that would be linked to the Mid-Levels escalator.

The project would be run as a charitable foundation funded by private donations, with $500 million earmarked as the sum necessary to cover restoration and renovation works, as well as ongoing maintenance. One family has already contributed $100 million to the project.

A government spokeswoman said the Chief Executive's Office had received the proposal and had referred it to the relevant bureaus. She said it had not agreed in principle to the proposal.

The plan would require the green light from the Legislative and Executive councils to withdraw the site from private tender and forgo future revenue on the development.

A proposal to convert the site into an arts and leisure facility was first proposed by Swire Properties in 1999, and last year the government approved the concept with a commitment to invite tenders this year and hand over the site for development in phases in 2005. The successful bidder was to be awarded a 50-year land grant.

Should the charitable project proceed, the administration would lose a lucrative land premium payment it could have collected as a commercial development, a move expected to prove controversial.

The government has in recent years flirted with limited land use charge exceptions to stimulate activity among industries deemed deserving, but there remains a considerable bureaucratic resistance to yielding land revenue.

The proposal "demands a fundamental shift in mindset which is never easy with government", the source said.

An executive at a major developer welcomed the initiative but said not all buildings on the site were worthy of restoration and cautioned "there needs to be enough capital in the foundation to sustain it".

Another developer executive said the government might be forced to complete the tender process.

But he thought few developers would want to bid against the charitable project if it had broad public support.

Central and Western district councillor Stephen Chan Chit-kwai said the arts project sounded "better than a merely commercial project".

"The Hotung family has a very good reputation in Hong Kong, so `it's not bad' would be my first response," he said.

The government has been accused of lies, deceit, pride and a host of other sins over its approach to the proposed development of a $12 billion "super-jail" on an island off Lantau.

The Living Island Movement yesterday listed what it saw as "the seven deadly sins" committed by the government with its proposal:

It had broken its post-July 1, 2003, promise to listen to the people;
Its consultation process, due to end tomorrow, was deceitful;
It planned to defile an environmental treasure;
It had lied about the reasons for the prison;
Pride prevented it acknowledging the project was a bad idea;
It would waste taxpayers' money;
It had understated the security risk;

"The proposal is not a fait accompli," Deputy Secretary for Security Jennie Chok Pang Yuen-yee said. "This is a genuine consultation process." She said people with a good idea would be listened to and their suggestions seriously considered.

However, she said the government had already done a rough evaluation of other possibilities and was convinced the super-jail - which would be built on reclaimed land and house up to 7,220 prisoners in multiple facilities - was the best way to go.

But Living Island Movement chairman Bob Bunker said the public should have more of a say about what was the best option for dealing with its criminals.

"Our main thrust is that there has been no public consultation on the need for such a facility or on its location," Mr Bunker said. "The so-called public consultation we are having at the moment is basically `tough luck, this is what you are going to get - what colour would you like it painted?'"

He accused the government of ignoring not only other sites but also other ways of addressing its current prison problems.

The current trend in the world was moving away from incarceration, and if Hong Kong followed suit, then the need for extra space might dry up.

"What is the point of spending $12 billion on a lump of concrete that you may not actually end up using very much?" he said.

But the government argues it needs the new jail because the prison occupancy rate is about 115 per cent and rising, and old facilities are long past their useful lifespans. Mrs Chok said they did not have a backup proposal if this one proved unsuccessful.

"I really do not want to elaborate on the other options," she said. "When we do something, we have to be positive about it.

"If the community as a whole, as represented by the vote in Legco, decides they do not want it, then we will have to reconsider."

She said there were no other suitable sites in Hong Kong for the facility, or multiple smaller institutions. The only other short-listed one, Kong Nga Po, is near the border with the mainland and is not an option as it has "great development potential for purposes that would facilitate economic integration".

Mr Bunker disagreed and said that site, and others like it, should at least have been included in the consultation process.

"What we want is a broader discussion of whether we need this prison, whether we need one this big, and whether there aren't any other options," he said.

Cheung Kong (Holdings) yesterday paid $32 million in compensation to settle a dispute over the illegal destruction of 250 mature trees at its One Beacon Hill luxury development in Kowloon Tong.

Critics described the penalty payment as derisory, saying the government could have demanded compensation as high as $400,000 per tree, or a total of $100 million.

A 2,900 square foot penthouse in the project was sold for $43.15 million on Tuesday.

The developer had sought a swift settlement, as the dispute had delayed the transfer of flats to more than 500 purchasers, some of whom had threatened to seek compensation. Cheung Kong had originally agreed to deliver the flats to buyers in February. But the Lands Department refused to issue the certificate of compliance, effectively blocking the transfers, after it found that more than 250 trees had been chopped down or severely damaged during the project's construction, thereby breaching a key condition of the original land sale.

A Lands Department spokesman confirmed that the certificate of compliance was issued after yesterday's payment.

Analysts said it was unlikely buyers would back away from their purchases because property values had appreciated significantly over the past 12 months.

Property experts were last night trying to get their heads around a new Hong Kong financial concept - "tree premium", otherwise known as what developers must pay for destroying the environment.

A benchmark has been established after it emerged that a Kowloon Tong tree may be worth as much as HK$130,000.

Cheung Kong (Holdings) yesterday agreed to pay cash compensation of HK$32 million to Land Department for slashing 250 trees at its One Beacon Hill project. That might seem a pretty penny but it represents only a third of earlier estimates.

Lai See cannot claim expertise in valuing sub-tropical flora but we contacted someone who can. Tree expert Jim Chi-yeung, chair professor of University of Hong Kong's department of geography, told us: "HK$32 million looks like a big number, but broken down to cost per tree, $130,000 is not particularly big."

We presume that was the view of Cheung Kong deputy chairman and environment supporter Victor Li Tzar-kuoi.

5. Hyatt Regency may be demolished for shops
Raymond Wang, The Standard 30 July 2004

Associated International Hotels is considering demolishing the 18-storey Hyatt Regency hotel in Tsim Sha Tsui to make way for a retail-and-office building.

The main board-listed company and parent Tian Teck Land said on Thursday it is conducting studies and will draw up a detailed redevelopment plan.

``Having carefully examined different possible renovation and redevelopment scenarios, the directors have decided to pursue the possibility of redeveloping the property into a commercial building comprising mainly retail components,'' the company said. No timetable has been set.

Surveyors said Hyatt Regency Hong Kong on Nathan Road has redevelopment potential - especially the retail component, which might give a higher return and capitalise on the growing number of mainland tourists.

Midland Surveyors director Ronald Cheung estimated reconstruction costs at between HK$1,000 and HK$2,000 per square foot. The value of the retail component was estimated at HK$50,000 psf, compared to HK$3,500 psf for the office sector.

Centaline Surveyors associate director James Cheung said the redevelopment plan may attract major developers, as had been the case when the hotel was offered for sale late last year.

At least six companies, including Cheung Kong (Holdings), Sun Hung Kai Properties and Chinese Estates Holdings, lodged bids before the sale was put on hold in January.

The highest bid was about HK$3.2 billion, well short of the HK$3.6 billion the hotel's owner hoped to get.

The value of the hotel, in the heart of Tsim Sha Tsui, had recently risen to between HK$4 billion and HK$5 billion, surveyors said.

``Demand for five-star hotels remains strong, but when considering the prime location of Hyatt Regency and the positive outlook for the retail property sector, a retail-and-office development is a good alternative,'' Cheung said.

He said major developers may be interested in making purchase offers or taking part on a joint-venture basis with the owner.

The hotel has 723 rooms, a shopping arcade and restaurants and covers a site measuring 43,525 square feet and has a floor area of 645,000 sq ft.

The Hyatt Regency is Associated International's main asset. The hotel is managed by Hyatt Corp, a Chicago-based company privately owned by the Pritzker family.

Shares of Associated International rose 0.85 per cent on Thursday to close at HK$5.90.

6. SHKP keen on first Tsuen Wan launch in decade
Eli Lau, The Standard 30 July 2004

Sun Hung Kai Properties (SHKP), Hong Kong's largest property developer by market value, plans to roll out the sale of a 1,624-unit project in Tsuen Wan this year, its first residential development in that district for more than 10 years.

Sun Hung Kai Real Estate Agency general manager Eric Chow said on Thursday the project at Yeung Uk Road, which has yet to be given an English name, was expected to be launched for sale next quarter while promotional activities would probably begin in mid-August. ``We haven't released any residential project in Tsuen Wan over the past decade so we are confident of an overwhelming response from homebuyers,'' he said.

SHKP said it would particularly target investors and consider offering special payment terms and packages. About 60 per cent of the units had two bedrooms, while 10 per cent were one-bedroom units. The remaining 30 per cent had three bedrooms. ``Tsuen Wan is a residential district near Chek Lap Kok Airport,'' Chow said. ``We believe more tenants will like to live there, especially after the opening of Disneyland at Penny's Bay.''

He said the project should offer ``attractive sale prices for homebuyers'' but the developer has yet to set the price.

The plan comes after SHKP netted up to HK$700 million from sales at BeneVille, a 680-unit residential project in Tuen Mun.

Chow said more than 80 per cent of BeneVille units had been sold since the public sales launch a month ago, at an average price of HK$2,400 per square foot. Sales of the remaining 100 flats would continue at a similar price level and would reap another HK$100 million for the company.

Chow revealed that the developer was drafting building plans for phase two of Yoho Town, a mass residential project in Yuen Long. The phase two project, comprising more than 2,000 units, was likely to be released for sale next year. ``We haven't finalised the plan so far, but we hope to include more flats with larger size than phase one,'' he said.

Chow added that market consolidation was almost complete, and ``we think the temporary slowing of transactions in the second quarter should be healthy for further development of the entire sector''.

7. Joint venture kicks off at Leighton Rd
Eli Lau, The Standard 30 July 2004

Morgan Stanley Real Estate Funds and USI Holdings have kicked off their first joint venture property project in Causeway Bay's high-end serviced apartment market.

The Morgan Stanley fund said it spent HK$162 million, partly in cash and partly in form of guarantee, to purchase a 40 per cent stake in a residential development at 133 Leighton Road from USI.

The property, a 26-storey office-commercial-hotel building, will be converted into a block of 203 serviced apartments with gross floor area of 110,676 square feet.

Tim Grady, Morgan Stanley Real Estate Funds Asia-Pacific executive director, expects to make further investments in the high-growth serviced apartment sector.

``As strategic investors, we were seeking a partner with strong property development skills and expertise in serviced apartment operations,'' Grady said.

Dennis Au, executive director of locally listed USI Holdings, hoped the Causeway Bay project would be the first in a series of joint initiatives.

``We're looking to do more in strategic cities in Greater China such as Beijing, Shanghai, Guangzhou and Hong Kong, leveraging each other's network, experience and expertise in order to identify the best opportunities in the hotel/serviced apartment sector,'' Au said. ``We are very confident that this niche property market has excellent growth potential as China's economy continues to strengthen.''

Morgan Stanley Real Estate Funds has been one of the most active property investors in the world since 1991, acquiring approximately US$33 billion (HK$257.4 billion) of assets.

USI, listed on the Hong Kong Stock Exchange since 1991, has been investing and operating luxury residential property development, value-added property management and telecommunications.

8. Resumption of land at Po On Road/Wai Wai Road gazetted
Hong Kong Government, 30 July 2004

The Lands Department today (July 30) announced the resumption of land at Po On Road/Wai Wai Road in Sham Shui Po for a redevelopment project implemented by the Urban Renewal Authority (URA) in association with the Hong Kong Housing Society (HKHS).

This redevelopment project has been included in the URA's Business Plan for 2003-04. The implementation will help to rejuvenate the old district concerned and improve the living conditions of local residents.

A total of 21 interests in Po On Road, Tonkin Street, Wai Wai Road and Pratas Street will be resumed under the Lands Resumption Ordinance.

The affected interests will revert to the Government three months after the date of the Gazette Notice. Details of the private land affected are contained in the Gazette published today.

Apart from their entitlement to statutory compensation, eligible owners of domestic properties will be offered an ex-gratia home purchase allowance or supplementary allowance as appropriate.

Owners and tenants affected may make statutory claims under the Lands Resumption Ordinance and, if the claims cannot be settled by agreement, may apply to the Lands Tribunal for adjudication. Any professional fees reasonably incurred for making such a claim may be reimbursed by Government. Occupiers of commercial properties may also be eligible for an ex-gratia allowance in lieu of the right to make statutory claims for business loss and disturbance.

Eligible domestic occupiers will be offered rehousing or ex-gratia cash allowance in lieu of rehousing. Rehousing will be in units provided by the Hong Kong Housing Authority or the HKHS itself.

Upon completion of resumption and clearance, the site covering an area of about 2,285 square metres will be granted to the HKHS at nominal premium for redevelopment.

This project will contribute to general environmental improvements in the locality. Mixed use development is permitted on site, and the current proposal is for a residential development with commercial and government, institution or community use on the lower floors.

9. Two approved Outline Zoning Plans amended
Hong Kong Government, 30 July 2004

The Town Planning Board today (July 30) announced amendments to the approved Kwu Tung North Outline Zoning Plan (OZP) and the Tai Po OZP.

The amendments involve respective revisions of the Notes of the OZPs to follow a revised set of Master Schedule of Notes (MSN) to Statutory Plans endorsed by the Town Planning Board. Under the revised MSN, various measures including broad use terms have been introduced to provide greater flexibility for change of use and reduce the need for planning application.

The general provisions under the covering Notes and the user schedules for various land use zones have been revised to expand the scope of uses that are always permitted. Besides, the planning intention for various zones has been incorporated in the Notes to form part of the statutory plan.

Opportunity is also taken to show the authorised railway scheme for the proposed Sheung Shui to Lok Ma Chau Spur Line on the Kwu Tung North OZP for information of the public.

The draft Kwu Tung North OZP No. S/NE-KTN/5 and the draft Tai Po OZP No. S/TP/18 incorporating the amendments are available for public inspection during normal office hours at the Secretariat of the Town Planning Board, 15th Floor, North Point Government Offices, 333 Java Road, North Point; and the relevant District Planning Offices of the Planning Department, District Offices and Rural Committee Offices.

Anyone affected by the amendments may submit a written objection to the Secretary of the Town Planning Board on or before September 30, 2004.

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