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Richard Woo

The Government wants to convert a bus-terminus site on the Central waterfront to commercial use to relieve land shortage in the core business district.

A government source said it was considering re-zoning the one-hectare terminus, lying between the outlying islands piers and the airport railway's Hong Kong Station.

The site probably would be linked to the roof-top retail development planned for the piers, the source said.

Height restrictions would be imposed on development to ensure surrounding projects retained sea views.

However, the re-zoning and development would be subject to a relocation of the bus terminus to the south, near the Star Ferry pier, which would be moved.

The source said given these conditions, the site might not be available for sale and development before 2006.

New land supply in Central is limited in the short term, and office landlords in the district are set to benefit from further rental rises predicted by analysts for this year.

The most likely near-term land supply was expected to be the Central Market site and the Tamar Basin site in Admiralty.

But government indecision and bureaucracy meant they were unlikely to be released this year, analysts said.

The Central Market site's release was questioned recently as legislators pressed the Government to build a new market for relocation of operators there.

The Government appeared to have made little progress in its rethink on the use of the Tamar site, which was intended to house new government headquarters. Government officials recently suggested an option of offering it on the market for private commercial development.

Analysts said even if the Government released the site for sale, it would take time to re-zone for commercial use.

The Government's other land reserve in Central, for longer-term commercial development, covers the General Post Office and neighbouring areas, and totals 5.23 hectares. The area is zoned for comprehensive development to produce two million square feet for commercial use.

This project is not likely to proceed until 2006 at the earliest, subject to the relocation of the Star Ferry pier.

According to Colliers Jardine, new core-Central office supply will not appear until next year, when Hongkong Land's 11 Chater Road redevelopment and the first phase of Two International Finance Centre, above Hong Kong Station, provide 1.23 million sq ft of space.

In 2004, a further 1.2 million sq ft should come from phase two of Two International Finance Centre and the planned Furama Hotel redevelopment.

Cushman & Wakefield said tight supply would continue, forcing prime office rents to rise 20 per cent to 25 per cent this year, despite a considerable slowdown in demand compared with last year.

Terrance Chow, executive director of CB Richard Ellis, said even if the Government auctioned the Tamar site this year, the building would be completed in 2004 or 2005.

The completion would not coincide with the expected supply in 2002 or 2003, but would help create steady supply in the long term, he said.

Mr Chow said disposing of the Tamar site for commercial development would not adversely affect the office market.

He said there was strong long-term demand for new offices with large floor plates, while older buildings were becoming technically obsolete and failed to satisfy user requirements.

Gold Rich Consultants director Francis Lau Tak said offices in Central would be in short supply.

Using the Tamar site as government headquarters would be a waste of land resources and selling the area would generate revenue for the Government.

However, he said it was not good timing to sell the site this year, as the office market had yet to fully recover.



Government considers commercial options