Analysts scorn Guangzhou plan
HONGKONG analysts have reacted with a mixture of scepticism and derision to a plan for a financial district in Guangzhou on a six-square-kilometre site anchored by twin 140-storey towers.
The size of the proposed scheme was ''pie in the sky'', said Mr Peter Churchouse, principal at Morgan Stanley.
''There may well be an argument for having a financial centre in Guangzhou but two 140-storey towers is fantasy,'' he said.
Beijing-controlled newspapers yesterday reported plans for the district to host the twin 140-storey office towers, considerably taller than Asia's current tallest building, Hongkong's 78-storey Central Plaza.
Guangzhou Mayor Mr Li Ziliu said the city had set aside six sq kms for the financial district, and that 40 to 50 lots would be offered by international tender by July.
Foreign investors would be able to bid for the land, he said.
Mr Li said there were at least 20 foreign banks with branches or representative offices in Guangzhou.
In effect, the twin towers would provide considerably more space than four Central Plazas.
For a building of that height, a realistic floor plate area for each tower would be 30,000 to 40,000 sq ft, which would provide total floor space of 8.4 million and 11.2 million sq ft respectively.
By comparison, the entire office stock for Hongkong's Grade A core Central space in mid-1992 was 10.1 million sq ft.
Even a floor plate of 20,000 sq ft (more like Central Plaza's) would give total floor space of 5.6 million sq ft.
Mr Churchouse said the take-up of space in a good year for the whole of Hongkong was about 3.5 million sq ft; Bangkok in a bull market absorbed about 2 million sq ft and normally 1.2 million sq ft per year.
To fill the building, the take-up would represent three years of the total office space demand for the whole of Hongkong, and Hongkong was a well established office centre, he said.
Mr Churchouse said that grandiose plans of this kind often never saw the light of day.
''Forget about the problems of technology involved in a 140-storey building - in itself it's a major technical feat - then think about financing it, then think about building it,'' he said.
He also pointed out that six sq km was about the size of the whole of Hongkong harbour.
Richard Ellis director Mr Dominic Leung Koon-hong said 140 storeys sounded ''a little over-ambitious''.
He said he had a lot of reservations about the market being able to absorb a project of that size in view of other projects that had already been approved.
The crux of the matter was time, he said.
If it were treated as several projects spread over five to eight years it would be more plausible.
''If I were a bank, I wouldn't finance it today. If it were ready six to eight years down the line, I'd look at it,'' he said.
He said he thought a project of such size would probably be located in the Tianhe district, a large area to the northeast of Guangzhou which is being developed as Guangzhou's new central business district.
The existing city centre was ''piecemeal and messy'', he said.
Mr Leung said a lot of authorities or individual bodies in various places in China tended to come up with similarly massive schemes.
They all had to go through the same process of discovering whether they were feasible.
Nevertheless, he said that it was clear that Guangzhou was destined to become a major business and financial centre in years to come.
Currently, official policy limits the number of stock exchanges in China to two and there are already two exchanges in place in Shenzhen and Shanghai.
Mr Ho Cheuk-yuet, senior analyst at Wardley James Capel, said that Shanghai had some advantages over Guangzhou as a financial centre.
Shanghai could provide a better set up as much of the infrastructure was already in place.
Guangzhou was largely a trading centre and, strictly speaking, had never been a major financial centre, he said.
In addition, its infrastructure and town planning were lacking.
Nevertheless, it had the advantage of proximity to Hongkong and people already knew it.
Mr Ho said such plans tended to be grandiose at the outset and modified over time.
It was merely as sign of intention and could, ultimately, provide good opportunities for Hongkong developers.