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1. Henderson buys residential site in Macau for $4b

2. Third site clears hurdle for auction

3. New residential site joins two others in Kowloon for auction next month

4. $20m plan to resolve West Rail disruptions

5. New World resumes Kowloon hotel plan

1. Henderson buys residential site in Macau for $4b
Raymond Wang, The Standard 25 August 2005

Henderson Land, Hong Kong's third-largest developer, has lined up its first foray into Macau's booming property market by agreeing to buy a residential site on the Taipa waterfront.

Analysts estimate the cost of a luxury project on the site - located near the Taipa bridge, between Ocean Garden and the University of Macau - at HK$16 billion.

But Henderson is expected to pay less than HK$4 billion for the land, vice-chairman Colin Lam said Wednesday. He also confirmed it had signed a conditional purchase agreement.

An investment bank analyst estimated the total development costs at HK$1,600 per square foot. Homes in the newest phase of nearby Ocean Garden are selling for between HK$2,500 and HK$3,000 psf.

If Henderson charged similar prices, it could expect a profit of HK$9 billion to HK$14 billion.

The project is expected to be one of the biggest in Taipa in recent years, with a developable gross floor area of about 10 million sqft.

Henderson previously said it was studying six or seven high-end residential projects in Macau.

Lam, who previously stated Henderson has no plans to enter the casino business, said the company is optimistic about the Macau property market and would probably team up with others.

Centaline (Macau) Property Agency executive director Rico Kwok said home prices in Macau jumped as much as 30 percent in the first quarter of this year, followed by a mild correction of 5 percent in the second quarter.

``Demand from expatriates for luxury flats will continue to increase as the local labor force may not be sufficient to meet the needs of a growing number of businesses, such as hotels and casinos,'' Midland Realty Macau sales director Jimmy Yeung said.

Real estate agents are upbeat about the property market in Macau. Shortages could begin to show up as early as next year unless the government begins to carry out land reclamation on a large scale in Taipa soon, they say.

Shares of Henderson Land fell 1.43 percent to close at HK$37.80.

2. Third site clears hurdle for auction
Danny Chung and Raymond Wang, The Standard 25 August 2005

The Hong Kong government has added a third property to its September 27 land auction, further evidence that its amended land sales policy has finally begun to work as intended.

If analysts have accurately estimated the value of the three sites, the one auction will allow the government to achieve almost half of its HK$21.1 billion target for land sales this financial year, which ends in March.

The government said Wednesday it has accepted a minimum guaranteed bid of HK$2.49 billion from an unnamed company for a site in Ngau Chi Wan, near Choi Hung.

The 155,636-square-foot Fung Shing Street site, earmarked for residential development, will have a construction area of 778,180 sq ft.

Henderson Land vice chairman Colin Lam called the bid price reasonable. He said his company, Hong Kong's third-largest developer, would bid for all three sites.

The largest developer, Sun Hung Kai Properties, declined to discuss its bidding plans, while No2 Cheung Kong (Holdings) was unavailable for comment.

Midland Surveyors director Alvin Lam said the Ngau Chi Wan site could fetch as much as HK$3.3 billion at auction, making the land cost of the development about HK$4,250 psf. The site could accommodate about 970 units, which would sell for HK$7,000 to HK$8,000 psf, he said.

Anita Cheung, research manager at Midland Holdings, said the fact that developers had succeeded in triggering three sites on the government's application list for auction proved the land sale policy did not require further tinkering.

Earlier this year, developers repeatedly failed to force an auction of properties on the application list. In June, the government revised its policy to make a bid of 80 percent of its minimum price enough to trigger an auction. Before that, bids had to meet or exceed the minimum price.

The change finally bore fruit last week when two adjacent sites in West Kowloon were triggered for auction. They are seen fetching HK$6.5 billion combined, about 73 percent above their combined minimum price of HK$3.75 billion.

Assistant district manager Billy Chua of estate agency Hong Kong Property said the auction of the Ngau Chi Wan site would stimulate property prices in East Kowloon.

``Some owners immediately adjusted prices upwards by 5 percent,'' he said, referring to flats at Sceneway Garden in Lam Tin.

Concerns about the relatively remote location of the site are not justified, said Hong Kong Property chief executive Freddie Wu. ``You can also say the environment would be a bit quieter.''

3. New residential site joins two others in Kowloon for auction next month
FOSTER WONG, PEGGY SITO and BENJAMIN WONG, SCMP 25 August 2005

A private residential lot in Kowloon worth at least $2.49 billion will be auctioned next month in what is being seen as a sign of the effectiveness of the revised land sale system.

The 14,400-square-metre site in Fung Sing Street, Ngau Chi Wan, will be the third piece of land to be sold at the September 27 auction.

A Lands Department spokesman said the government had accepted the minimum guaranteed bid of $2.49 billion for the lot under the application list system, and this would be the opening bid at the auction.

Yesterday's announcement came a week after two adjacent residential sites in West Kowloon, together worth more than $3.75 billion, were also triggered for sale at the auction.

Henderson Land vice-chairman Colin Lam Ko-yin said the revised application list system gave more flexibility to developers, adding that the positive response reflected developers' confidence in the housing market.

The government last night did not say whether the proposed price had reached its asking price or just 80 per cent of it, which is permitted under the modified application system introduced on June 21. Under the changes, officials will estimate the prices hours before the auction and not sell the land until the bidding prices reach or pass the estimates.

A developer that triggers an auction must join the bidding but is not obligated to buy the site if its offer fails to satisfy the government.

Midland Surveyors associate director Alvin Lam Tsz-pun predicted the site would fetch $3.3 billion, or $4,250 per sq ft at auction.

The $4,250 is comparable to the selling price of nearby properties in the secondary market. When completed, the units could be sold at $7,000 to $8,000 per sq ft, he said.

The fact that three sites had been triggered for auction within a week showed that the revised land sale system really worked, Mr Lam said.

But JP Morgan property analyst Raymond Ngai Chi-hung said the guaranteed price of $2.49 billion was a little aggressive. "The site is not at a prime location."

Development of the Ngau Chi Wan site will allow a minimum gross floor area of 43,377 square metres when completed.

The auction will be held at the Hong Kong Cultural Centre, and the final conditions of sale of the three sites on offer will be available on September 9 when other details of the auction will be published.

It will be the first land auction this financial year and the first land sale since the application list system was revised.

The government collected more than $20 billion from the sale of six sites in the last financial year, far more than its forecast of $4.56 billion, and enough to help tip the budget deficit into surplus.

4. $20m plan to resolve West Rail disruptions
ANITA LAM, SCMP 25 August 2005

KCRC will invest up to $20 million to improve its railway system after a report singled out stormy weather as the main cause of a series of service disruptions that have plagued the corporation.

Michael Tien Puk-sun, the corporation's chairman, said yesterday the West Rail line was particularly vulnerable to violent storms that have marked this year's rainy season, because 45 per cent of it was elevated.

"Our experts did not foresee such adverse weather conditions when they built the West Rail," he said. "They considered elements of bad weather, of course, but they applied an international standard."

So far this year, 16 service disruptions have been reported on West Rail, 11 involving signal failures and 80 per cent during the rainy season from June to August.

Mr Tien said that unlike the Ma On Shan line, the West Rail was not shielded from bad weather by high-rise buildings.

This made it vulnerable to lightning strikes, which could burn out the computer cards of the signalling system. "You may ask why a $40 billion construction would burn out so easily... I want to stress that the damaged parts were only hardware components of the back-up system, while our [major control software] remained stable," Mr Tien said.

But breakdown of the backup system would cut train speeds from an average 120km/h to only 25km/h.

To tackle the problem, KCRC will invest $10 million to $20 million to add more earthing connections, which help transmit high-voltage electricity from lightning strikes to the ground.

The corporation also will spend $10 million a year for more staff and equipment to find out the cause of each incident.

The new measures are expected to take effect by February next year but commuters were told they should encounter fewer troubles in the next six months.

"It will soon be autumn and we expect fewer [lightning] strikes ahead. The important thing is we finish the work before the arrival of the next rainy season," Mr Tien said.

A long recovery period after the recent disruptions to West Rail had created an impression that its performance was worse than East Rail, he said, but in fact East Rail had two more service disruptions than its newer counterpart so far this year.

The KCRC modified its information system yesterday to include the waiting time and the total travelling time for the most crowded stations, instead of total travelling time for the whole route, to help passengers plan journeys.

But Mr Tien ruled out any further concessions on train fares.

"What concerns the public most is whether our services are safe and reliable," he said. "This is where our strength lies. I would rather use my money to make our trains on time than to cut fares."

He said the number of customers for West Rail - which has struggled to meet its targets since opening in December 2003 - had not dropped despite recent problems.

5. New World resumes Kowloon hotel plan
PEGGY SITO, SCMP 25 August 2005

New World Development has resumed its plan to build a 60-storey hotel next to the New World Centre in Tsim Sha Tsui as demand surges for five-star hotel rooms.

Taking into account the improved economy and an anticipation of growing tourism in Hong Kong, the company was reviewing the plan initiated in the late 1990s, a spokesman said, adding the project was expected to start next year but no timetable had been finalised.

With a gross floor area of about one million square feet, the hotel investment is estimated at $2 billion to $3 billion.

New World originally proposed building a 500-room five-star hotel as part of its New World Centre extension in the late 1990s which also involved knocking down the 130,000 sqft East Wing office building. However, the plan was postponed when the local economy slowed after the regional financial crisis.

New World Centre, covering a site area of 424,000 sqft, is a residential-hotel-commercial complex providing a floor area of about 2.52 million sqft.

"We are now reviewing the project as demand for hotel rooms increases," the spokesman said.

New World operates three five-star hotels in prime tourist districts - the 542-room New World Renaissance Hotel in Tsim Sha Tsui, the 860-room Renaissance Harbour View Hotel in Wan Chai and the 570-room Grand Hyatt, also in Wan Chai.

It is also building a 320-room hotel in Hanoi Road, Tsim Sha Tsui, as part of a one million sqft redevelopment project by the firm and the Urban Renewal Authority.

Hong Kong has been a magnet for top-tier hotels in the wake of the economic recovery and the imminent opening of the Disneyland theme park next month. Central saw the opening of the Landmark Mandarin Oriental yesterday and the Four Seasons is due to open next month.

"There is still demand for more luxury hotels in Tsim Sha Tsui," the spokesman said.

Last week, New World notified the tenants of the East Wing Tower that they would be required to move out for the proposed hotel project.

Existing tenants would be given six months' notice under a break clause in the lease and New World is not required to pay them compensation.