Far East Hotels & Entertainment has terminated the purchase of a club house in Hong Kong due to the property sector slump. Managing director and chief executive Derek Chiu Tat-wai said the decision had been made as the firm was not expecting a quick recovery. Far East Hotels said in its annual report that a subsidiary had entered into a provisional agreement for the purchase of the club house in Tsuen Wan for $23 million. Mr Chiu said Far East had not lost money on the cancellation as the deposit had been returned by the vendor. Meanwhile, Far East and Cheung Kong (Holdings) are going ahead with a residential-retail complex in the former Lai Chi Kok Amusement Park. The 50-50 joint venture reached a land premium agreement of $710 million with the Hong Kong Government for a development totalling 592,020 square feet. Mr Chiu said work was under way and the project would be completed around 2001. This year, Mr Chiu said, the company's earnings would rely on its hospitality businesses in Hong Kong and Beijing, although earnings from its Warwick Hotel in Cheung Chau would not be encouraging. Last year, the Cheung Chau hotel's profits plunged 88 per cent as the company offered a big discount on room rates to retain guests. But its Warwick International Apartments had an occupancy rate of 85 per cent and returned a stable income of one million yuan (about HK$930,000) per month.