Cheung Kong (Holdings) deputy chairman Victor Li Tzar-kuoi yesterday hit back strongly at critics of its purchase of a Ma On Shan hotel site, telling them to 'put their money where their mouth is'. 'There were just two or three bids received by the Government for the tender of the hotel site,' Mr Li said. 'We won the site with the highest bid. It's the market price.' The counterattack came after strong criticism over the Government's decision to award the 86,112 sq ft site to Cheung Kong for $120 million. The price represents an accommodation value of about $200 per square foot based on the total floor area of about 620,000 square feet. The price was described by analysts as 'as cheap as that for agricultural land'. Mr Li yesterday said the average development cost would be far higher than the expected $200 per square foot. He said the company could spend an extra $400 to $800 per square foot on the foundation work as there were cavities beneath the site. According to the Lands Department, the geology of the area comprised superficial deposits overlying marble strata with large cavities occurring within the marble in some locations. Mr Li said construction work which involved ground investigations, excavations and foundations would encounter difficulties due to these conditions. They did not affect the safety of the hotel development but it would boost construction costs, he said. Mr Li estimated the overall cost of the hotel - comprising about 1,000 rooms - to be $1.7 million per room, almost equal to a $1.75 million per room Government projection. He said it was a pure property project. It was a long-term investment and the operation of the hotel was the crucial to that investment, indicating that land cost was not the most important variable. Mr Li said so far only Cheung Kong had invested in the project, but it was possible that associated company Hutchison could take a stake.
