FACED with a lacklustre industrial property sector, Sun Hung Kai Properties (SHKP) will delay construction of a number of its industrial and composite industrial/office (I/O) projects. Construction of these projects scheduled for completion by 1997 will be cut almost 37 per cent from 2.33 million square feet to 1.47 million sq ft, according to an analyst familiar with the proposed plan. SHKP has also won government approval to rezone one of its industrial sites in Kowloon for office development. A SHKP spokesman confirmed that the industrial site at 44 Wing Hong Street would now be turned to office use. Sino Land recently tried taking this tack, applying for one of its I/O sites in Kowloon Bay to be switched to pure office use. But this was turned down by the government. Estate agents said SHKP's plan to ride out the weak industrial market by delaying new construction until the market turns around made sense because the industrial market was currently plagued by oversupply and falling rents and prices. 'There are just masses of industrial space planned,' said Dominic Pickavance, head of the commercial property department with Brooke Hillier Parker (BHP). Currently, there are a total of 72 requests for permission to build I/O facilities in Hong Kong, according to BHP. But nobody knows how many developers will actually proceed with their plans after obtaining the right to modify the existing use for such purposes. A lot depends on how much the Government charges in land premiums. According to the analyst, SHKP has delayed construction of a 511,000-square foot industrial site in Sha Tin until after 1998. They have apparently also delayed construction of two other industrial sites at 77 Wing Hong Street as well as an industrial site at 212-214 Texaco Road in which it has a 50 per cent stake. SHKP will also scale down the size of one industrial site from 125,000 sq ft to 114,000 sq ft. Chris Brooke, associate director with BHP, said developers had taken a 'wait and see' attitude towards the I/O market. 'Nobody knows what the demand will be,' he said. Mr Brooke and others said that today's industrial building standards are high enough that SHKP has a number of options when deciding what to do with a particular building. Industrial complexes could be used for flatted factory purposes (standard industrial use), I/O use or even office use, according to estate agents. 'It really depends upon their investment strategy,' said BHP's Mr Brooke. At the moment there is an oversupply of industrial property in the market with rents fetching considerably less than I/O rents. Estate agents generally agreed that applying to have the property re-zoned into office use could provide a developer with more income than either renting or selling the space as a flatted factory, or as I/O space or retaining the building for leasing purposes. 'The catchment would be larger for commercial tenants as there are more restrictions on industrial users who have to be linked with an industrial building,' said the same property analyst. Just how many other developers would follow suit and make a similar application to the government is difficult to judge. A spokesman for Sino Land confirmed that the company had applied to the government to re-zone an industrial property at No 12 Kai Shing Street for commercial office development. But the company was turned down, he said. 'They said that they wanted to keep all of Kowloon Bay zoned industrial,' said the company spokesman. According to the analyst, the downturn in the market may also force Sino to scale back some of its industrial projects along Hung To Road. However, the company spokesman said Sino Land would proceed with their construction plans along Hung To Road. 'Numbers 19 and 23 are on schedule and will be completed on time,' said the spokesman. However, he was unable to say if any other industrial projects in other locations might be delayed by the downturn in the industrial market. Most analysts and estate agents however, said developers would likely scale back construction and even delay industrial projects until the market picked up.