Hang Lung Properties will receive more rental income from the mainland than from Hong Kong by 2010, two years earlier than the original target, executive director Terry Ng Sze-yuen says.
'Our rental income on the mainland will be greatly enhanced with the shopping centre in Shenyang open by then,' Mr Ng said.
The 1.2 million-square-foot Shenyang Zhongjie Hang Lung Plaza takes Hang Lung's completed mainland investment projects to three from two. Its first two projects, Plaza 66 and Grand Gateway in Shanghai, generated HK$1.11 billion in rental income in the first half, up 63 per cent year on year. Rental income in Hong Kong rose 11 per cent to HK$1.85 billion.
'A lot of potential tenants have expressed interest in taking up spaces in our Shenyang shopping centre although it has not been released for pre-leasing,' Mr Ng said.
The firm had committed 20 billion yuan (HK$22.76 billion) to develop nine shopping complexes on the mainland, about half of its 40 billion yuan investment target, Mr Ng said.
The shopping centres, due to be completed between 2010 and 2012, are in Shenyang, Tianjin, Wuxi and Jinan.
Hang Lung was considering grouping all the new complexes into a single holding firm incorporated on the mainland as a way of streamlining its structure, Mr Ng said. But there was no timetable for that, he said.
Mr Ng said land costs accounted for only 18 per cent of its total investment costs because Hang Lung bought the sites before the property boom on the mainland.
The land cost of its 9 million square feet Shenyang City Hang Lung Plaza, due to be completed in 2011, was only 100 yuan per square foot, he said.
'We didn't buy any sites in the past 18 months as land prices have shot up to crazy levels,' he said.
Despite the softening mainland market, Mr Ng expects land costs to rise to about 30 per cent of future investment costs. But that was still a comfortable level, he added.
In Hong Kong, Mr Ng said only a few of its 2,000 remaining units had been sold over the past two months. 'We prefer to hold these units for one or even two years until the market becomes buoyant. No discounts will be given to drum up sales,' he said.
The holding cost for those units was HK$50 million a year or HK$14 per square foot, which could be compensated for if they sold for HK$100 per square foot or more, Mr Ng said.