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SCMP Reporter

Luxury property developer sets off on new direction by rebuilding Sheung Wan telephone exchange into 150 flats

Luxury property developer Pacific Century Premium Developments (PCPD) is branching out  into the highly competitive mass residential market  by redeveloping  a telephone exchange building in Sheung Wan.

The property arm of PCCW, which  last year  booked $5 billion  from its flagship    Residence Bel-Air project,  will transform  the   Wo Fong Street building into 150 flats.

The project will start selling next year and is expected to be completed in 2008.

'It will be a boutique apartment project with gross floor area of about 100,000 square feet,' chief executive Robert Lee Chi-hong told reporters yesterday.

He said  the building would continue to house a telephone exchange, which could  be contained in a smaller space  because of technical advances.

Mr Lee did not disclose development costs or other details of the project.

He  did say that the company was prepared to invest in large-scale residential development.

'We are eyeing opportunities within the Pearl River Delta,' said Mr Lee, without ruling out investing in property projects in Macau.

The Sheung Wan site is the only exchange building  PCCW has  handed over to PCPD.

The company  did not have to pay a land premium for the redevelopment because  the site was originally zoned for commercial and residential use,  said sales and marketing director Wendy Gan Kim-see.

Property agents said the project, which is  in an old district, would mark the firm's entry into the highly competitive mass residential housing market.

Nearby Queen's Terrace,  jointly developed by New World Development and Cheung Kong (Holdings),  is now selling  for between $3,200  and $5,500 per square foot in the secondary market.

PCPD has  first refusal when it comes to redeveloping PCCW's telephone exchange buildings,    which are considered the primary source for PCPD's land bank.

Residence Bel-Air's revenue stream will only stretch to 2008, by which time all units are scheduled to have been sold.

Ms Gan said the redevelopment of other telephone exchange buildings would depend on the land premium costs that applied to their land-use conversion.

While PCPD  has said the telephone exchanges it is eyeing  are believed to cover a gross floor area of  one million sq ft, analysts said it was  difficult to calculate the  company's net asset value due to   unclear land premium costs and the number of sites involved.

'And we still don't know how many [telephone exchange buildings] sites can be developed into residential projects,' BNP Paribas Peregrine analyst Adrian Ngan Wai-hung said.

'However, the sites should still be regarded as a favourable factor to PCPD while the current land supply is so limited.'

Last year, PCPD applied to convert  an 11,841 sq ft telephone exchange building site in Shek Kip Mei into residential and commercial use but  the Town Planning Board rejected the application.

Mr Lee said PCPD  sold about 560 units in Residence Bel-Air last year,  generating sales of $9 billion. The firm still has about 1,000 of the luxury units  to sell, with 260  going on sale this year.

He expected luxury property prices to rise by more than 10 per cent.

He expressed hope that some Bel-Air units would fetch more than $13,000 per square foot.

PCPD still owes its parent $3.9 billion for investments made in Cyberport.

Flat exchange

Sheung Wan project will have 100,000 sq ft gross floor area

It will be a boutique residential project with 150 units

Company is prepared to invest in large-scale homes projects



PCCW unit goes into mass housing