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Kenneth Ko

Hutchison Whampoa expects site and redevelopment costs for the former Hilton Hotel site to total more than $8.3 billion.

Executive director Albert Chow Nin-mow said construction costs would reach $3.5 billion and interest expenses would be about $1.8 billion.

 The company also had to pay $3.02 billion in land premium to the Government.

Mr Chow expected the development to take between five and six years.

The land premium includes the acquisition of the neighbouring car park and Beaconsfield House.

Mr Chow said the Government refused to lower the premium, which he considered was higher than market levels.

Hutchison decided to accept it because the project would improve the surrounding environment and benefit the company and the public, he said.

By paying an average premium of about $5,800 per square foot, Hutchison can build a further 520,000 sq ft of floor space, raising the total developable office space in the project to 1.2 million sq ft.

Including car park, garden and public space, the project has a gross floor area of about 1.5 million sq ft.

There will be a 60-storey office tower 283 metres high, and six basement levels of mainly car-parking space.

The average premium to be paid by Hutchison is slightly lower than the $5,964 a square foot paid by Citic Pacific for the Tamar Basin commercial site. The Tamar project will take about three years.

 Mr Chow said the Hilton project would take longer to build and bear higher interest expenses.

Given interest at 9-10 per cent a year, the difference of two or three years to completion could mean a difference of 20-30 per cent in costs.

Mr Chow said the Hilton project would be funded by corporate rather than project finance.

The new building would be held for rental, with income expected to reach $100 million a month, he said.

Hutchison's controlling shareholder, Cheung Kong (Holdings), of which Mr Chow is deputy managing director, will move its operations from China Building in Central to the new tower.

Mr Chow said there was no plan to redevelop the China Building.

He said Cheung Kong's investment in the joint-venture office development with Land Development Corp in Sheung Wan would reach $7 billion.



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Hutchison Whampoa

$8.3b tag on cost of Hilton project