New Pioneer Centre key to property firm's plans

KOWLOON Development, which is to introduce its shares on to the Hong Kong stock exchange next month, expects to make $172 million rental per annum from its flagship New Pioneer Centre development in Mongkok starting from the 1996 financial year.

The Mongkok development is the largest property in the real estate firm which is largely controlled by the chairman Ng Siu-chan and the late Lawrence Louey's family.

According to the company's prospectus, which was published yesterday in connection with the introduction of its 483.76 million shares, the recurrent income will be heavily reliant on the rental generated from the New Pioneer Centre.

The development represents about 80 per cent of the company's total property portfolio on a gross floor area basis and about 86 per cent of the total property portfolio on a market value basis.

The dependence on the project becomes the major risk factor for investors who are interested in the company because the rental income from the project will substantially affect the company's earnings, according to property analysts.

Kowloon Development said about 70 per cent of the New Pioneer Centre's office space and 93 per cent of the retail and restaurant space in the building had been let.

Due to the initial rent-free periods offered to certain tenants, the directors expected the full effect of the rental income to be reflected in the group's profits for the year ending December 31 1996 and beyond.