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Sandy Li

Hang Lung Development has asked the Lands Department for an extension to the completion date of its proposed residential development in Ma On Shan.

 The company said the project's construction had been delayed because large cavities had been found in the underlying marble strata.

 A Lands Department spokesman said approval for the extension was subject to a geological investigation report to be submitted later.

 He said the original deadline for completing the proposed development was September next year.

 Hang Lung bought the 117,327 square foot site for $1.24 billion at a government land auction in March 1995. The site provides a gross floor area of 586,638 sq ft.

 Analysts said the delay would lead to increases in development costs. Hang Lung was not available for comment yesterday.

 The department said the length of the extension would depend on the applicant's request and how it justified the need for more time.

 It said the geology of the area comprised superficial deposits overlying marble strata with large cavities occurring within the marble in some locations.

 Recently, the Chinachem Group was granted a 12-month extension to complete its project in Ma On Shan because of a similar problem, the spokesman said.

 The completion deadline for Chinachem's project had been extended to next June.

 Chinachem plans to develop two 36-storey residential towers, comprising 550 units, with a gross floor area of 430,000 sq ft.

  Another project which had been completed nearby called Vista Paradiso - a joint venture between Cheung Kong (Holdings) and Concord Land Development - also had sought an extension due to the cavity problem.

 Developers are required to pay penalty fees when a project's completion is delayed if they cannot provide good reasons.

 Analysts said Hang Lung's earnings for next year would be hit hard by the delay in the Ma On Shan project.

 Also, the company's rental income growth would slow due to the market slump and depressed economic growth.

 DBS property analyst Winnie Chiu said Hang Lung had not fully booked its profits from the sale of the Noble Place development in Tuen Mun. She predicted the company's year-end result would not be affected.

 She said the company usually had just one new property development up for sale each year, but its strength was its strong cash reserve.



Hang Lung asks for more time to complete Ma On Shan project