Developer Pacific Concord Holding plans to increase substantially its exposure in the Shanghai property market because profitability there is growing. Chairman and managing director Wong Sai-chung said it was planning to shift 20 per cent of its capital to Shanghai. This would put the group's investments in the mainland on par with those in Hong Kong, he said, adding that existing property investment in China accounted for 30 per cent of its total investment portfolio. Mr Wong was wary of the market potential in Hong Kong. 'The age of exceptionally high profit [generated from Hong Kong's property market] has passed, the [economic] role of Hong Kong as a middleman between China and other countries would be changed after China entered the World Trade Organisation,' he said. A 15 per cent profit margin would be considered high now for Hong Kong property developments, while the group could achieve 30 to 40 per cent profit margins for Shanghai projects. Even without the Asian financial crisis and the policy of producing 85,000 housing units per year, the SAR's property bubble would have burst because of decreasing market demand, he said. However, the group had spent nearly HK$100 million on two feasibility studies for theme malls and residential developments aimed at 'creating a new market' for housing and tourism in Hong Kong. Mr Wong said the two projects - Old Hong Kong and Space Island, each worth about HK$10 billion - were still awaiting government approvals. International management corporations had shown an interest in joining the projects once the proposals received the go-ahead. Old Hong Kong is a plan to turn the Quarry Bay waterfront into a tourist attraction by developing about 750,000 square feet of government land plus a 30,000 sq ft industrial site in Hoi Yu Street, privately owned by Mr Wong, into a commercial, hotel and retail project. The project aims to reproduce the old face of Central and Wan Chai of 50 to 100 years ago. Space Island, near the future railway station on the Lok Ma Chau spur line, would provide a 2.3 million sq ft theme mall, a 500-room hotel and several blocks of apartments. 'It will be the largest theme park in Hong Kong, providing a hi-tech exhibition mall,' Mr Wong said. 'The Disney theme park in Hong Kong will probably not attract European or Japanese tourists because they already have [similar theme parks in their countries], but Space Island can,' he said. He estimated Space Island could generate 1 per cent of annual gross domestic product in Hong Kong because tourists from China and around the world would visit. However, the proposals had been delayed because approvals from the planning department had not been granted. Mr Wong said: 'Shenzhen is prosperous but its opposite side, Lok Ma Chau, is still undeveloped.' Analysts said it was still unclear whether the two projects would eventually be approved because of their exceptionally large scale. Mr Wong said Pacific Concord had a joint-venture project with Sun Hung Kai Properties (SHKP), Henderson Land and New World Development to develop a 162-hectare site at San Tin near the proposed Space Island. The consortium had won approval to build 3.38 million sq ft of residential floor area to provide 4,536 units. The massive residential development was approved after being scaled down several times so it was not detrimental to the ecology of Lok Ma Chau. Mr Wong said the consortium was going to apply to increase the plot ratio and developable floor area. Pacific Concord had another joint venture project with SHKP at Hung Shui Kiu, Yuen Long. It had a site area of 550,000 sq ft, of which 170,000 sq ft was owned by SHKP, and the consortium was seeking a conversion of land use from agricultural to residential, he said. The project, near a Light Rail station, could produce several million sq ft of residential floor area subject to planning approval. Pacific Concord also owns other agricultural land awaiting land-use conversion. Mr Wong said a site in Yuen Long was expected to provide up to 500,000 sq ft of residential area. It held another of 450,000 sq ft in Sha Tin. He expected a smaller residential development at Tai Uk Wai, Tsuen Wan, to get pre-sale consent and it would be released for sale this month.