Cosco (Hong Kong), the territory's arm of China's largest shipping company, is gearing up to take a bite at the local housing development market as part of its plans to rationalise the group's property portfolio. Pan Chengwei , general manager of the group's property arm, Cosco (HK) Property Development, said it would start with small to medium-scale projects worth between $200 million and $1 billion. 'It is better to be firm and steady, in view of our strength and experience,' he said. The local residential market was seen to have great potential. There was a huge demand for housing as people's standards of living continued to rise, he said. Mr Pan said the company's favoured housing development sites would be in areas away from the city centre but still accessible by public transport. He admitted that the company was now entering the race because of the correction in prices which had accompanied an 18-month slump in the Hong Kong market. Projects would be developed solely or through joint ventures with local property big guns, he said. Cosco (Hong Kong) demonstrated its confidence and commitment to the territory with last week's announcement of plans to acquire 15 office floors for about $3 billion at a commercial project under development in Sheung Wan. The 52-storey tower, being built by New World Development and the Land Development Corp, will become the group's new headquarters and be named Cosco Tower. The group's property arm has a land bank with a floor area of 460,000 sq ft in Hong Kong and 101,181 sq ft in China. It currently owns properties worth $2.4 billion that are either for rent or self-use in Hong Kong and China. About $900 million worth of properties are under construction in Singapore, Macau and the mainland. Mr Pan stressed that Hong Kong would remain the main investment focus followed by mainland projects. In order to make full use of its assets, it was working on certain 'adjustments' that involved selling some of its existing properties, he said. 'This is because a lot of our properties are not being properly made use of,' he said, referring to some large residential properties which currently house staff. The company's thinking was to build new residential developments consisting of smaller flats for staff and then selling the larger flats. Cosco (HK) Property Development, with total assets worth $4 billion, was established last year to bring the group's various real estate businesses, previously spread over different subsidiaries, under one roof. Mr Pan said it might also sell the company's existing headquarters, Hong Kong Shipping Centre in Western district, when it moves into new premises next year. The building is valued at $700 to $800 million. In the mainland, the company is building properties in cities such as Guangzhou, Yantai and Shanghai. These include the 1.2 million sq ft Shanghai International Ocean Shipping Building in Pudong's Lujiazui zone. The 50-storey building, in which the company has a 37.5 per cent stake, is a joint venture with its Beijing parent and will cost between US$150 million and US$170 million to build.