bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Kenneth Ko

KEY British business and mainland Chinese investment interests joined forces for the first time yesterday to buy a commercial site for $2.85 billion at a government land auction.

  This was despite the fact that the price paid by Swire Properties and CITIC Hongkong for the site in Yau Yat Tsuen was well below market expectations of up to $3.8 billion.

   The purchase represents CITIC's first involvement in a government land auction and the first time since 1986 Swire has succeeded in outbidding its rivals.

   The joint venture is seen as a surprise to the market and an ironic line-up amid the escalating Sino-British row on Hongkong's political reforms, which has also cast a shadow on the territory's land disposal programme for the next financial year.

   Despite the disappointing price tag for the commercial site, the four plots auctioned yesterday fetched a total of $4.06 billion for the Government, putting an end to the current financial year's land auctions.

   The latest sale pushed total land revenue from public auctions to a record $12.43 billion this year, which ends today.

  There is still uncertainty over next year's land disposal programme, as a date for the Sino-British Land Commission meeting has yet to be set.

   However, government officials and property developers both expressed optimism that the commission would meet and that land sales would not be disrupted.

  Government land agent Nigel Burley said discussions with the Chinese side on next year's land disposal programme were ''helpful and constructive''.

  ''At this point in time we haven't fixed a firm date for a land commission meeting, but I can assure you these discussions are continuing quite usefully.

  ''It is clear to me that the Chinese side is concerned to ensure that the economy and the land input into that does continue.

  ''I have every reason to believe that we will have an early meeting and that we will get a new programme agreed quite soon.''    Mr Robert Ng Chee Siong, chairman of Sino Land, and Mr Thomas Kwok Ping-kwong, vice-chairman of Sun Hung Kai Properties, also said they were not greatly worried about the land sales programme.

  ''The land commission will meet in the end. It will not be a problem even if no land sales are to be held in the first one or two months of the next fiscal year,'' Mr Kwok said.

   Referring to the Sino-British row, Mr Larry Yung Chi-kin, managing director of CITIC, conceded that people might be relatively pessimistic in the short term but he added that the long-term prospects of Hongkong remained positive.

   ''Temporary disputes [between China and Britain] should not affect the future prosperity of Hongkong,'' he said.

   He demonstrated his faith in the territory with a surprise move by his company to participate in yesterday's land auction, clinching the Yau Yat Tsuen site for $2.85 billion in an equal joint venture with Swire Properties.

  Mr Yung described the price as ''reasonable'' while Mr Henry Fan Hung-ling, deputy managing director of CITIC, acknowledge that it was lower than he had expected.

  Mr Fan said the company's listed vehicle, CITIC Pacific, could also join the project, as it had enough cash.

  He added that CITIC Pacific had a market capitalisation of about $30 billion and less than $1 billion of debt.

    Despite the disappointment over the site's price, the participation of CITIC and Swire is seen as a confidence booster to the market.

  CITIC Hongkong is the local arm of Beijing's China International Trust and Investment Corp, while Swire Properties is a subsidiary of the Swire group.

   The purchase of the site is also the first large property acquisition by a mainland group in the territory since the outbreak of the Sino-British impasse on Hongkong's political reforms.

   Swire Properties was returning to public land auctions after an absence of nearly seven years. In May 1986, it paid about $1 billion for the Victoria Barracks II site, on which the Pacific Place presently stands.

  The link-up of Swire and CITIC is not surprising as both companies already have a good proven working relationship - both have substantial stakes in Hongkong Dragon Airlines and Cathay Pacific Airways.

  Mr Keith Kerr, managing director of Swire Properties, said they were ''very satisfied'' with the price, and the market expectations of up to $3.8 billion were ''a lot of hype''.

  He said the site would be used to develop a large shopping centre, coupled with a relatively small amount of office space. A total of $5 billion, including land premium, construction costs and interest payments, would be invested.

   He said the development would take 31/2 to four years to complete.

  Mr Kerr described the catchment area for the new shopping development as ''potentially enormous'', as it would have direct access into both Kowloon Tong Mass Transit Railway and Kowloon-Canton Railway stations.

  Bidding for the Yau Yat Tsuen site was cautious and lacklustre. Besides the CITIC-Swire group, only Sino Land and Sun Hung Kai Properties joined in the fray.

   Bidding opened at $2.5 billion, and, after only seven more bids, the hammer was down for the site.

  Developers were much more active in competing for the other three plots of Crown land - residential sites in Ma On Shan and Yuen Long, and an industrial lot in Sheung Shui.

  The Ma On Shan site went to Sino Land and Mr Ng Chee Siong's family for $990 million, after an opening bid of $670 million.

   Kerry Properties bought the Yuen Long site for $155 million, after an opening bid of $95 million.

  The Sheung Shui site was sold at $65 million to Sun Hung Kai Properties, after bidding started at $40 million.



Swire, CITIC link up in auction