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SCMP Reporter

LIPPO Group and Sun Hung Kai Properties are competing to buy Shenzhen International Exhibition Centre from a financially troubled international consortium.

  The two developers are believed to be showing the keenest interest of a number of prospective buyers in the only well-managed exhibition complex in Shenzhen.

   Following the success of the Hongkong Convention and Exhibition Centre, the Shenzhen complex is also being eyed by other local developers including New World Development, Lai Sun and Hang Lung Development.

  The prospective buyers believe the exhibition business is set to boom with the rapid increase of trade and manufacturing investment in the fast developing economic zone.

    Sun Hung Kai Properties official Jack So, a former chief executive of the Hongkong Trade Development Council (TDC), was in Shenzhen early this month for negotiations about the possible purchase of the complex.

  The property group wants to make use of Mr So's expertise and experience in the exhibition business, which are regarded as essential for such an investment.

    Sources say the vendor is a group with mainland, Singapore, Hongkong and German interests faced with a heavy burden of interest payments associated with the innovative project.

  The asking price for the property is below $100 million, but the loan liability is much bigger, according to the sources.

   It is understood that the mainland shareholder, an offshoot of the Shenzhen government, will play a major role in the sale. Other partners failed in their attempt to sell their interests last year.

  International Exhibition Centre, completed two years ago, is on Shangbu Road North.

  Above the exhibition hall is the four-star Shenzhen Continental Hotel, which will be sold with the centre.

  The hotel is currently managed by Lai Sun Development's listed offshoot, Glynhill International, which bought the management contract from Chains International in early 1991.

  Sources say that, in a bid to secure greater interest from Hongkong developers, the Shenzhen government has agreed to grant the buyer two parcels of land next to the exhibition centre.

  The land can be used for residential and shopping arcade development.

  Preferential tax treatment has been given to certain exhibitors of products in the centre.

  ''Dozens of millions of dollars [the asking price] are hardly sufficient to build the Shenzhen International Exhibition Centre, but the main concern is the liability associated with the project,'' a local developer familiar with the property said.

     He said the sale was complicated by the hotel and land elements and the fact that the exhibition business was a new one in China.

   He said the Continental Hotel might be able to increase occupancy from the current average of 50 to 60 per cent.

    Mr Henry Chia, the chairman of exhibition designer Pico International, said he believed exhibition facilities in Shenzhen of the right quality would gain from the close economic relationship between Hongkong and the mainland city.

   He said the demand for space at the centre would increase as larger manufacturers and traders began to show greater interest in exhibiting their products.



Rivals vie for China showpiece