Hongkong China, the property arm of publicly listed Lippo Ltd, is on the prowl for luxury residences to buy and possibly redevelop, says Lippo Ltd managing director John Lee Luen-wai. The company is more traditionally active in commercial property projects such as Lippo Tower in Admiralty and has a variety of other commercial redevelopment projects. Before the parent company's annual meeting yesterday, Mr Lee said it planned to replenish its land bank by buying luxury flats in Happy Valley or on the south side of Hong Kong Island. 'We might buy existing sites, demolish and rebuild.' Hongkong China was also interested in developing mass residential housing in partnership with local developers, Mr Lee said. 'We are looking to tie up with some of them, but we have no concrete plans as yet,' he said. Hongkong China was sitting on substantial capital resources and needed to put its money to use, he said. Mr Lee was not optimistic about prospects for the commercial market and said the company would hold its property until the sector improved. He said Hongkong China had no immediate plans to unload any of the 15 to 16 floors it owned in Lippo Tower. Total floor space of just over 210,000 square feet was netting the company about $8.4 million a month. Rents averaged $40 per sq ft. The new life insurance headquarters in Wan Chai would net about $3 million a month. During the meeting he was quizzed by a shareholder who asked why the net asset value of Lippo Ltd was $12 per share while the stock was trading at only $4.60 a share. Mr Lee said part of the problem was that Lippo's economic fortunes had rested with the ups and downs of the property market. In 1994 the company made more than $1 billion in net profit, thanks largely to the sale of property. But profits fell off by just over 60 per cent in 1995. With more recurrent income streams, he promised that shareholders would see less of that sort of fluctuations in income, and a more realistic pricing of their stock.