Wharf (Holdings) is considering amending plans to include serviced apartments in its 2.7 million-square-foot Gateway II office complex in Tsim Sha Tsui. Analysts said there was a 'reasonably good chance' that Wharf would include a residential component in the project which also has 500,000 sq ft of retail space in the three 33-storey office towers. Nick Thompson, communications manager with Wharf, said the company was 'assessing' the merits of the idea. A change in plans could be attributed to a 'glut' of vacant office space in Kowloon and a lack of luxury accommodation along the Kowloon waterfront, Pamela Tam Yi-ting, associate director of research and consultancy services with Richard Ellis, said. According to one analyst, when completed in 1999, the project could be similar to Swire Properties' Pacific Place in Admiralty. Property analysts said such a mixed-use development made a lot of sense. 'It is very realistic,' Franklin Lam, an analyst with HG Asia, said. 'They may want to do it if they are not that optimistic about the office market.' He predicted the future demand for serviced apartments in the Kowloon area would be strong. Wharf's Gateway I and Harbour City are about 90 per cent leased and home to some of the largest multinationals such as Sony Corp and Ernst & Young. Many of these company executives would prefer luxury flats near their offices in such a development, analysts said. The development would be conveniently located near the Hong Kong China Ferry Terminal, the MTR, the Western Harbour Crossing and would offer some of the best views across the waterfront. Ms Tam called a move to include serviced apartments 'incredible', noting that Wharf tore down three 17-storey blocks of luxury flats to make way for Gateway II. 'They just lost out on four years of income,' she said. However, analysts said Wharf had no option but to tear down the older luxury flats in order to build Gateway II. In any event, they said Wharf owned the land and would not incur much additional construction costs by including the serviced apartments. In fact some analysts thought the mixed use development would increase the capital value of the property. Wharf officials said part of the Gateway II project had slipped slightly behind schedule but should be completed about three months later than originally planned in the first part of 1998. The whole project was still on line to be completed in 1999, the company said.
