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In a show of confidence in market prospects, Kerry Properties has paid HK$120 million for an industrial site in Tsuen Wan for residential development.

The 40,000-square-foot site is occupied by the Chung Nam Industrial Building near the Tai Wo Hau MTR Station.

Kerry Properties said it would apply to modify the lease of the property to facilitate future residential development.

The company said it had a potential developable area of about 200,000 sq ft with a plot ratio of five times.

The acquisition increases the group's land bank, which now provides a potential area of four million square feet.

Projects in the pipeline include the 965,000 sq ft Hoh Fuk Tong development in Tuen Mun and a 319,000 sq ft project in Ap Lei Chau.

Analysts said developers appeared to be more confident and keener to replenish land banks after encouraging land auction results last month and Kerry Properties had rich financial resources for acquisition.

In the first quarter this year, the group generated HK$1.6 billion from property sales.

FPDSavills industrial department director James Siu Siu-sun estimated Kerry Properties' Tsuen Wan residential redevelopment could be worth HK$1 billion upon completion since flats in the area sold for HK$3,000 per square foot.

The acquisition price of HK$120 million represents an accommodation value of HK$600 per square foot.

'The price is above market level as the developer should pay a land premium to convert the land use. Industrial buildings are normally worth only HK$300 per square foot in Tsuen Wan,' Mr Siu said.

The site had been released for sale through tender in 1997 but failed to attract buyers as the asking price was too high.

'The site may have additional development potential since neighbouring government land with some 30,000 sq ft could be combined for redevelopment,' he said.

Under existing town-planning regulations, the site could be developed for residential use with a plot ratio of five times. Combining it with the government land would increase the developable area to 350,000 sq ft.

Meanwhile, Hongkong Land yesterday won planning approval to redevelop Lai Sing Court in Tai Hang for luxury residential use with relaxed building height controls.

The redevelopment of the 61,600 sq ft site met difficulties after the Planning Department amended the outline zoning plan and restricted the building height and density for the development.

However, the Town Planning Board yesterday agreed to relax the height restrictions after Hongkong Land and the owners of Lai Sing Court objected to the amendment.

A spokesman for the board said the site was located in a marginal area.

'We decided to relax the building height but maintain the density restriction to avoid adverse visual impact,' the spokesman said.

Under the latest plan, Hongkong Land could redevelop the site up to 50 storeys, with a gross floor area of 308,000 sq ft.



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Hongkong Land

Kerry pays $120m for industrial site