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Cheung Kong (Holdings) has agreed to pay more than HK$920 million to convert the Tiger Balm Garden site in Tai Hang for residential use - the largest land premium deal so far this year.

'The site is in excellent location and we have accepted the land premium offer from the Lands Department,' Cheung Kong deputy chairman Victor Li Tzar-kuoi said.

Mr Li did not reveal the lump sum but said it translated into an accommodation value of more than HK$2,000 per square foot.

Based on 460,000 square feet of residential floor area that can be built on the site, the premium amount is estimated to be more than HK$920 million.

Cheung Kong bought the site from Sing Tao Group's former chairman Sally Aw Sian for HK$100 million in 1998.

Analysts said the Tiger Balm premium settlement reflected a revival of developers' interest and confidence in the housing market following recent interest-rate cuts.

They expected to see more premium settlements.

Developers have been cautious in settling premiums in the first half of this year. The Lands Department generated only HK$771 million from 47 lease modifications and land exchanges in the period.

Cheung Kong has emerged as the most aggressive developer. Prior to the latest deal -  it paid HK$249 million for a land-use conversion in Cheung Sha Wan and HK$160 million in Hunghom.

Meanwhile, Mr Li said Cheung Kong was studying the possibility of issuing A shares and B shares in the mainland stock market.

But he said it was still too early to talk about definite plans because many regulations had not been finalised.

On its Hong Kong property sales, Mr Li expected to see good responses to new residential projects, mainly in urban areas, in the second half of this year.

He said it was now cheaper to buy a flat than to rent in the wake of the interest-rate cuts.



Cheung Kong pays year's largest premium for Tiger Balm site