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SCMP Reporter

Li Ka-shing's dream of boosting his property empire by expanding its territory in North Point has been thrown into doubt with an unexpected verdict by the Government on his proposed cruise-ship terminal.

 Last Friday, the Town Planning Board surprisingly voted down the plan by Mr Li's listed flagship Cheung Kong (Holdings) to build the SAR's second cruise liner pier on the North Point waterfront.

 The board reversed its original approval for the project given 10 months ago, saying that North Point might not be the best location.

 The unexpected reversal raised suggestions the Government had finally bowed to public pressure following strong criticism by residents, environmental protection groups and politicians.

 At stake was more than the cruise terminal. The Government's decision meant Mr Li's ambitious plan to build a property-development empire in North Point could be derailed, analysts said.

 Prudential-Bache International analyst Raymond Ngai said the decision could affect Cheung Kong's original redevelopment concept in North Point.

 To capitalise on the tourists attracted to North Point through the proposed terminal Cheung Kong had been expected to build a property complex next to the pier comprising retail and entertainment facilities.

 Those facilities would form part of a hotel and commercial project, Mr Ngai said. But the concept would have to be changed without the terminal.

 Cheung Kong was unavailable to comment on the issue.

 The proposed cruise pier would have played a key role in Cheung Kong's redevelopment programme. The pier would have been linked to Cheung Kong's hotel project, to be built on a godown site owned by Fook Lee Group.

 Next to it is the 1.17 hectare Government Supplies Depot site in Oil Street, which is reserved for commercial-residential development and for sale through tender early next year. This site can provide a gross floor area of 1.32 million square feet.

 Analysts had expected that Cheung Kong would pay an aggressive price for the site, aiming to add it to its massive property development in the district.

 The redevelopment plan had been expected also to include two nearby buildings owned by Hongkong Electric Holdings, indirectly controlled by Cheung Kong.

 Analysts had made a rough estimation that the combined site area of government lots and Cheung Kong's properties covered an area of 300,000 sq ft, with a potential gross floor area of more than three million sq ft.

 Some analysts speculated that the hotel project might not proceed without the pier to attract cruise travellers.

 Mr Ngai expected Cheung Kong's bidding interest in the Oil Street site to weaken without the terminal.

 But he said the cruise terminal reversal would not have a significant impact on Cheung Kong's existing balance sheet, as the proposal was at a preliminary stage.

 Dresdner Kleinwort Benson property analyst Terry Ip said the Government had decided not to approve the terminal because it wanted to avoid public criticism.

 The project, highlighted by Financial Secretary Donald Tsang Yam-kuen during his Budget speech in March, would have required the Government granting a piece of land between the proposed terminal and hotel project.

 Critics claimed the Government would be unfairly favouring Cheung Kong should it grant the land.

  With the controversy over Cyber-Port, a project undertaken by Mr Li's son Richard, still ringing in everyone's ears, the Government had tried to avoid criticism of favouritism to the Li family, Mr Ip said.

 However, a Town Planning Board spokesman said that, while there were no alternative suggestions when approval was granted, other organisations had later suggested building terminals in other locations, such as Kowloon Bay.

 Mr Ngai said the North Point site was not a good location for a cruise terminal as it was an old residential area. He preferred the Kai Tak site, saying it would have spectacular views and massive tourism-related facilities.

 Meanwhile, Wharf (Holdings), operator of Hong Kong's only existing cruise terminal at Tsim Sha Tsui, planned to upgrade its facilities, also diminishing the approval for the Cheung Kong venture, the board spokesman said.

 Wharf, which had attacked the Cheung Kong project as unnecessary due to lack of demand, declined to comment on the North Point terminal decision.

 But Frankie Yick Chi-ming, director and general manager of Wharf Transport Investments, insisted a second terminal was unnecessary.

 Cheung Kong, which had argued that the cruise terminal industry was supply-driven, is likely to try and rescue its plan by lodging an appeal against the Town Planning Board decision.

 But observers said the chances of the board reversing the decision again were extremely slim, and would only put the Government in a dilemma.



Cheung Kong all at sea without terminal