K Wah International has dropped a renovation proposal for a new development on the residential site at Piper's Hill, Kowloon, it acquired for HK$170 million at last month's public auction. The 63,207 square foot former government quarters site in Caldecott Road, near Shamshuipo, would now be redeveloped into two residential blocks instead of renovating the existing building, deputy managing director Alexander Lui Yiu-wah said. Mr Lui said his company considered various development plans for the site, including renovating the 30-year-old building and selling it because it was structurally sound and offered spectacular views. 'We are a bit surprised at its good quality considering its old age. There's no water leakage for such an old building, which is quite amazing,' he said. However, K Wah cancelled the renovation plan after weeks of study because redevelopment would maximise its potential and was more suited to market demand. Mr Lui said the existing flats, each about 3,600 sq ft, were too large to draw buyers in a sluggish luxury market. There were also other considerations such as difficulties to arrange mortgages with banks because of the building's age, he said. He said the site would be developed into two 13-storey blocks with flats ranging from 2,300 sq ft to about 3,000 sq ft. It could provide a total floor area of about 83,346 sq ft. K Wah planned to spend about HK$400 million on the luxury project, Mr Lui said. A group of developers that bought a neighbouring site on Piper's Hill are also considering renovating the building and selling it. The consortium formed by New World Development, Sino Land and Manhattan Realty bought a 35,489 sq ft site on Caldecott Road at the public land auction in October for HK$110 million. Neighbouring K Wah's site, it is also former government quarters and shares the same lease conditions. Patrick Chow Kwok-choi, general manager of Manhattan Realty, said the firm was studying different plans for the site, including renovation. 'We are working on the best development options for our site. And we have not finalised details so far,' he said. Mr Chow said the renovation plan would save time for the project. 'But this will not save much construction costs because we need to renovate nearly everything in the building.' Renovation would include new parking spaces, stairs, corridors, pipes, electrical fittings and the incorporation of environmentally friendly features such as balconies and bay windows. The developer would also need to negotiate with government departments for structure and safety guidelines for the building during renovation, Mr Chow said. He said it would take some time to reach a final plan for the site. Meanwhile, K Wah expects to launch two residential projects for sale this year. Mr Lui said the firm was preparing to sell The Palace luxury project, which comprises 94 units in Broadcast Drive, Kowloon, and a 600-unit mass-residential development in Ma On Shan. Both sites were acquired at public land auctions during the past three years. He said the firm's latest land survey of the Ma On Shan site showed it would not be affected by cavities underground, a common feature in Ma On Shan. The Government had warned of possible cavity problems in the area and extended the construction period of the site to four years from the usual three years, before the site was put up for sale by auction.