Richard Li Tzar-kai, chairman and chief executive of Pacific Century Group Holdings, strode into the conference room of his company's 38th floor Citibank Tower offices in Citibank Plaza recently fresh from securing a remarkable deal. Fresh from Tokyo, where he had just engineered his company's largest property deal to date - a US$720 million acquisition through tender of a central Tokyo commercial site - Mr Li was sanguine about his winning bid. With prices literally a fraction of what they were after the Tokyo property bubble burst almost a decade ago, he said the Japanese market represented good value for money. Japanese analysts were divided over the merit of the purchase, with some saying Pacific Century paid too much for the 52,233 square foot plot. Others said he had provided the Tokyo property market with a shot in the arm. Pacific Century officials argued that the HK$5.54 billion price tag was not surprising, considering that such a prime piece of real estate rarely came up for sale. They said the site, near the Royal Palace, had attracted high bids from competing Tokyo developers. Mr Li dismissed as nonsense one Japanese analyst's comment that the company paid a 60 per cent to 70 per cent premium for the property. 'On a scale of 10 a decade ago, the property we won is now worth a two or three on the same scale,' Mr Li said. The Japan National Railway Corporation is slated to auction off more property, and Mr Li said there was every likelihood the company would submit further tenders if the situation was right. Pacific Century Group is also involved in financial services and infrastructure. It was established in October 1993 and is privately owned by Mr Li. The company is also involved in residential housing projects in the territory, Singapore and China. It has an office project in Bombay and a number of energy projects on the go in China. According to Mr Li, Tokyo properties were now selling for a fraction of what they would have fetched a few years ago. Equally important, he said, the office market - contrary to most predictions - would improve. He said the market was near to bottoming out, and predicted that there would be a shortage of quality grade 'A' space in Tokyo in the near future. 'The total number of new buildings in the office sector is at a 15-year low,' Mr Li said. Perhaps the most compelling reason for throwing his hat into the Tokyo property scene was what he referred to as the positive yield situation. According to Mr Li, Japanese yields - for the first time in 20 years - have been outperforming interest rates. When his office block is completed, he estimated, yields would be 4-5 per cent. Ten-year treasury bond yields stand at 2.7 per cent in Japan, while short bonds are less than 1 per cent, according to Pacific Century officials. Mr Li said it would not be long before more overseas developers got involved in the Japanese market. 'My prediction is more foreigners will move in,' he said.