Cheung Kong will not reduce its investments in Hong Kong despite escalating construction costs that are making it increasingly difficult for developers to run their businesses, says chairman Li Ka-shing.
'With the numerous infrastructure projects the government is undertaking, and rising labour costs, construction costs will increase by 30 to 40 per cent over the next four years,' said Li. 'That will make the growth of construction costs higher in Hong Kong than in any other country in the world.'
Li's made the remarks after announcing Cheung Kong's interim results for the six months to the end of June - including a 9 per cent fall in core earnings to HK$7.57 billion, excluding the contribution from subsidiary Hutchison Whampoa.
Li later said that in the mass market, current construction costs excluding interest expenses and professional charges amounted to HK$3,000 per square foot, while in the luxury market they were as high as HK$8,000 per sq ft.
'But although the market environment is getting tougher, we will not reduce our property investment in Hong Kong. Our land bank will be sufficient for development for the next four years,' he said.
Deputy chairman Victor Li Tzar-kuoi said Cheung Kong would continue participating in land auctions, and its fast-asset turnover strategy would remain unchanged. As at the end of July, he said Cheung Kong had earned HK$32.4 billion from selling more than 7,000 flats in Hong Kong, on the mainland and in Singapore.