Sun Hung Kai Properties (SHKP) expects to strengthen its cash position and cut debt by stepping up property sales and reducing land purchases, according to executive director Michael Wong Yick-kam. He said the company's gearing - just above 19 per cent last year - would drop further this year. He said the company was in a sound financial position with net debt of about $22 billion and pointed out that between July and May last year SHKP generated $25 billion from property sales. Mr Wong said expenditure on land purchases and replenishment would be substantially reduced compared with the previous year, but the company would continue to buy land selectively. During this financial year, its main land acquisitions were the two residential sites in Leighton Hill and Shau Kei Wan, bought for a total $5.28 billion. The Shau Kei Wan site was a joint venture with Swire Properties. Mr Wong said SHKP would fund the two sites from internal resources and had no plans to increase bank borrowings. Despite tight liquidity in Hong Kong, the group managed to arrange re-financing for all its bank loans maturing during the past eight months, he said. He conceded some loans were charged higher interest rates than in the past but said the rise was not substantial. According to Mr Wong, SHKP had a strong property rental income to support its growth. He estimated the rental income exceeded $5 billion this year. Incomes would be enhanced by the completion of more infrastructure projects in next two years, he said. Mr Wong said SHKP was well prepared to cope with present difficulties and the problems plaguing the property market, such as high interest rates and tight liquidity, would be temporary. He said there was underlying housing demand and while prices were dropping, land values were also lower, which aided developers. Mr Wong said the slowdown in the Hong Kong economy would be short-lived. He predicted a recovery by the middle of next year. SHKP would continue to focus on the Hong Kong property market and invest actively in infrastructure. In medium and long term, SHKP hoped to increase mainland investments, in both property and infrastructure ventures.