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1. 200 Bellagio sales amid `overwhelming' demand

2. Tsing Yi berth contractors pick up speed

3. Building blocks of recovery

1. 200 Bellagio sales amid `overwhelming' demand
Staff reporters, The Standard 7 October 2002

Wharf Holding's Bellagio project in Sham Tseng continued to be the focus of the property market when buyers snapped up a further 200 flats at the weekend.

Wharf assistant director Ricky Wong said weekend sales had taken the total number of flats sold to 850.

The average sale price was about HK$2,300 per square foot.

Wharf Holdings has already reaped HK$2 billion from the project.

Wong believed the remaining 150 to 200 flats available would be sold in the next few days.

Meanwhile, about 100 high-floor flats in Block 8 have been reserved for rental.

The rental price will range between HK$15 psf and HK$20 psf. Despite the overwhelming demand from buyers, Wong insisted Wharf would stick to its original plan and reserve Block 9 for sale early next year.

Wong also revealed Wharf Holdings had already obtained pre-sale consent for phase II of its Sorrento project.

Sorrento phase II, a joint development by Wharf Holdings and Mass Transit Railway Corporation located above Kowloon Station, would contain 850 flats with floor space ranging from 1,300 sq ft to 1,800 sq ft.

Wong said Sorrento flats would be launched for sale at the end of this month or early in the next.

Wong said that Wharf would likely slash the price of the flats because the quality of Phase II flats was less satisfactory than those of Phase I.

2. Tsing Yi berth contractors pick up speed
Keith Wallis, The Standard 7 October 2002

The first berth at Tsing Yi's HK$10 billion Container Terminal 9 (CT9) will become operational next May, 12 months later than scheduled, after contractors clawed back about two months' delay on the project.

Modern Terminals managing director Erik Bogh Christensen said: ``Berth number one is about 12 months late, berth two between six and nine months late and berth three is three months late. The three other berths will be ahead of time.''

The first berth should have been completed in May this year, but the project has been dogged by a raft of construction delays.

Christensen said capacity constraints at Modern Terminals' existing three-and-a-half terminals have been avoided by improving productivity.

Christensen said this helped Modern Terminals post record throughput last month when it ``handled well over 1 million TEUs [twenty-foot equivalent units]''.

Christensen said uncertainty between the United States and Iraq and the lockout at the US west coast ports made it difficult to predict total throughput for Hong Kong port this year. But he believed the port, which includes the Kwai Chung container port, plus river trade and mid-stream operations, ``would do more than 18million TEUs this year''. He also estimated that container throughput would grow between 4 per cent and 5per cent next year, assuming US political issues were resolved.

Christensen also welcomed completion of the new terminal because it would offer Modern Terminals additional flexibility, so that containerised cargoes from the firm's largest shipping line customers could be centralised.

Modern Terminals, in which Wharf (Holdings) has a 55 per cent stake and China Merchants Holdings (International) 18 per cent, is taking four of the six berths at the new terminal complex.

The other two will be owned by Li Ka-shing's Hongkong International Terminals (HIT).

Under the terms of the deal agreed with the government in 1998, HIT is taking the first berth, while Modern Terminals is taking the following two.

Once all six berths have been completed Modern Terminals will give up its two berths at the existing Container Terminal 8 (West) and swap them with Asia Container Terminal, which was originally due to take two berths at CT9.

About half of a HK$2.6 billion five-year revolving credit facility Modern Terminals signed last week with eight leading banks, including HSBC, Standard Chartered and Bank of China, will help pay for the terminal operator's CT9 investment.

Christensen's latest completion forecast means the construction contractors, a joint venture between South Korea's Hyundai Engineering & Construction and China Civil Engineering Construction Corporation (CCECC), have recovered about two months delay. This followed comments in the summer by the then secretary for economic services Sandra Lee that completion of the first berth would be in July next year.

Hyundai and CCECC started work on the CT9 project in May 2000 but ran into a series of rows with environmentalists and later the government over the dumping of contaminated mud at sea. This has led to significant delays.

Asked about the port's future, Christensen said: ``So long as there is growth the container terminals can't be a sunset industry.''

3. Building blocks of recovery
GLENDA KORPORAAL, SCMP 7 October 2002

Leighton Holdings' departing Hong Kong chief John Faulkner has seen the company double in size in just five years. Picture by Edmond So

If John Faulkner were running Hong Kong, there are three things he would do - drop the SAR's peg with the US dollar, start spending some of its reserves on new infrastructure projects and allow in some wealthy mainlanders who are prepared to invest in the local economy.

After almost 15 years in Hong Kong as managing director of the Asian operations of Australian construction firm Leighton Holdings, Mr Faulkner is about to head back to Sydney.

Leighton Asia is one of Hong Kong's leading international contractors with an annual turnover of about HK$3.6 billion this year. The company has doubled in size over the past five years with operations in China, the Philippines, Indonesia, Malaysia, Singapore, Thailand, Vietnam and Taiwan. Work in hand has tripled from HK$2 billion five years ago to about HK$6.4 billion today.

Leighton has completed more than 100 projects in Hong Kong, including the Science Museum, the Museum of Coastal Defence, the award-winning Australian International School at Kowloon Tong, various rail projects including the Kowloon-Canton Railway Corp's light rail system, the new Tseung Kwan O MTR station and track laying for the West Rail project.

It was involved in eight projects worth about HK$3.5 billion associated with building the airport at Chek Lap Kok, including the Tung Chung section of the North Lantau expressway, several pipelines and an aviation fuel supply facility for the airport. It did site preparation for the Hong Kong Convention and Exhibition Centre and Cyberport and has built several Housing Authority estates.

The company is also project manager for casino magnate Stanley Ho Hung-sun's HK$1 billion Fisherman's Wharf project in Macau.

The Hong Kong Mr Faulkner is leaving is a far cry from the days when he first arrived in 1988. Pacific Place was just being built and unemployment was almost non-existent.

Then there were the "good old days" of the '90s when billions of dollars were poured into building the airport and its associated infrastructure, making Hong Kong a paradise for the construction industry.

"They tell me an optimist in Hong Kong these days is someone who irons five shirts on a Sunday night," he jokes from Leighton's offices in the Sun Hung Kai Centre.

But he soon turns serious, as he sees little short-term relief for Hong Kong's unemployment problem.

"Hong Kong usually has a boomerang economy - it keeps coming back when you think it is gone. But this has been quite a sustained period of very little growth - if any - and it is really hard to see whether it will bounce back as quickly as it has from the past troughs."

Mr Faulkner believes it is time for the government is to respond to the downturn by spending more on new key infrastructure projects.

"The government should start spending some of their reserves now to revitalise the economy," he says.

"Hopefully, when things start booming again, they will recover some of it. We save for a rainy day and the rainy day happens to be here.

"It's time to be spending."

He says this could include more public transport links around the back of Hong Kong Island and other road and rail projects.

Leighton is at present bidding for work on the proposed HK$10 billion, 7.4 km spur line to be built by the KCRC from Sheung Shui to Lok Ma Chau, providing an additional rail entry into Shenzhen. The next big project being eyed by the construction industry is the HK$28 billion Central to Sha Tin railway line which was awarded to the KCRC earlier this year.

"It's big," Mr Faulkner said.

"Work won't start on that until 2004. But there are something like 30 contracts which will come out of that."

Longer term, there is the proposed Lantau-New Territories bridge and the freeway up the west into China.

He would also like the new bridge to Zhuhai to go ahead but admits this as a "long shot".

Asked what Hong Kong would look like in five years' time, Mr Faulkner said simply: "It won't have the peg."

"Hong Kong is overpriced . . . despite the fact that house prices have come down, I still think the peg is a problem. It is very hard to attract tourists to Hong Kong and equally as hard to attract expatriates to Hong Kong in the future because of the high cost."

But the good thing about Hong Kong, he says, is that by and large, people do pay their bills. Or at least the government and its agencies which have provided the bulk of Leighton's business in Hong Kong.

"Doing business in Hong Kong is a lot simpler [than in some other Asian countries]," he said.

"Tendering is a lot more transparent. Most of our work has been done for government or for government-related organisations.

"These companies can be tough but at least they pay."

Mr Faulkner believes Hong Kong needs to attract more people - including those from the mainland. But they need to be people with high-level skills and money to invest in the economy.

"You need people who have the capacity to spend some money here - not just people who come here and have to be supported," he says.
Leighton is the project manager on the Fisherman's Wharf in Macau but Mr Faulkner said there was no sign yet of all the big new casinos, resorts and hotels discussed at the height of the bidding for the new casino licences.

"There may well be something on the drawing boards but it hasn't got out to the public," he says.

Mr Faulkner is also very cautious about the construction market in China, where the company has done only a few projects despite having a strong base in Hong Kong for more than 25 years.

He feels it is hard to make money there with Western-style building standards. "China is extremely hard to penetrate unless you can find some real niche opportunity. These guys can do it themselves anyway - they don't need our expertise. They have got their own."

Hong Kong is providing a base for Leighton to expand into Taiwan, where it is part of a consortium which has just won an HK$800 million contract to build part of the country's new high-speed rail project and is hoping to win more.

From his new base in Sydney, he will still have responsibility for Leighton Asia and expects to be back here often.

He saw Hong Kong as a place where people worked hard - and played hard.

Looking back, he said Hong Kong had been "a fantastic place to be" over the past 15 years.

He still has strong memories of the handover ceremonies five years ago.

"I was very privileged to have attended both ceremonies - at the Tamar site when Chris Patten was leaving and the Exhibition Centre when it was handed back. It was something quite moving. It won't happen to me again unless somebody takes over Australia . . ."