Financial services group E2-Capital (Holdings) plans to spend $400 million to develop a luxury residential site in Kowloon City as part of its efforts to transform itself into a key property player, executive co-chairman Fung Ka-pun said yesterday. The company has purchased No21 Grampian Road and expects to complete the acquisition of two neighbouring buildings soon. The combined site will be redeveloped into a single luxury residential tower with a gross floor area of 70,000 square feet. 'Including the land premium and construction fees, total cost of developing the residential site will be around $400 million,' Mr Fung said, promising that bigger plans were afoot. 'We will focus on larger property projects and dispose of smaller ones,' he said. Company secretary Billy Cheung said the flats would be released for sale after one or two years, and that earnings contributions would be booked only after the sales. E2-Capital's property development outperformed its financial business last year, with contributions from the division reaching $268 million, or 82 per cent of turnover. The change in focus helped the company post profits of $67 million last year after two consecutive years of losses. Property consultants said potential for the Grampian Road project could be huge, given the relatively short supply of new high-end developments in the district. Midland Surveyors associate director Alvin Lam Tsz-pun estimated E2-Capital could build a 30-storey tower comprising 60 luxury flats of 1,200 sq ft each, assuming a plot ratio of about 3.3 times. 'Most residential developments in Kowloon City are still low-rise, due to height control in the past. So a high-rise building would have a better value,' he said. According to Centaline Property Agency, second-hand units near Grampian Road, such as The Boomsville, were priced at an average of $7,000 per sq ft.