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SCMP Reporter

The Airport Authority is to sell the two-hectare site earmarked for its 600,000-square-foot headquarters at Chek Lap Kok to a private developer and then lease about one-third of the space when the premises are completed.

 The site is to the north of the airport terminal on a 45 ha block earmarked for commercial development. It sits right in front of what will become Terminal 2.

 The authority said the three low-rise, 10-to-11-storey buildings each would have a gross floor area of 200,000 sq ft.

 The buildings would comprise Package 1 of the proposed $25 billion phased development plan for the area, dubbed the Airport Village, north of the passenger terminal.

 'We have decided to look to the private sector to undertake the whole project,' Allan Yeung, general manager property development with the Airport Authority, said.

 'We are not going to own any of it. Instead, we are going to lease a significant portion of one building.'  Mr Yeung believed developers would be keen to submit tenders, beginning this week, knowing they would own 100 per cent of the project.

 'If they do 100 per cent of the work then they should get 100 per cent of the upside.' Mr Yeung said prospects for commercial development at Chek Lap Kok were better than on Hong Kong Island.

 'People at the airport create their own demand,' he said. 'This is a unique niche market.'  The authority's internal surveys indicated that existing airport tenants, such as airlines, needed 400,000 sq ft of additional space.

 The developer also would have the satisfaction of having the authority as an anchor tenant leasing almost one whole building and paying market rents, Mr Yeung said.

 'By leasing, we provide the developer with a guaranteed cash flow and covenant,' he said.

 'This is a low-risk project and we want to structure this so there is only upside for the developer.'  Mr Yeung said it made sense to sell the land to allow the authority to free the cash.

 'Part of the reason why we are going to lease is we don't want to tie up the land and just sit on it,' he said.

 Mr Yeung would not say how much the authority expected by way of land premium, but said it would reflect market value.

 The authority was giving 100 per cent ownership of the project to a developer because it wanted to focus on its core business of running the airport, he said.

 The authority did not rule out becoming involved in other aspects of commercial development at the Chek Lap Kok complex.

 'We would consider taking part in other areas that are critical to the airport,' he said.

 'We are not afraid to invest. We are the biggest beneficiary.'  Phase 2 of the development plan would include a variety of amenities, such as shopping, an exhibition centre, a hotel and serviced apartments. That would take three to five years to build, Mr Yeung said.

 The Airport Village would include 2.6 million sq ft of developable land.

 Development of the remaining area would be phased in over a longer period and cater to other complimentary uses to fit the needs of travellers and airport employees, the authority said.



Airport Authority to sell HQ site