Developer says site plans part of 30 billion yuan development programme in mainland centres Hang Lung Properties hopes to close a deal to acquire a multibillion-yuan mainland site this month, according to executive director Terry Ng Sze-yuan. Mr Ng said the deal was related to one of three or four high-end commercial projects, worth a total of 10 billion yuan, that remain to be undertaken as part of the 30 billion yuan mainland investment programme announced in 2005. The deal would be Hang Lung's seventh commercial project outside Shanghai since the programme began. Hang Lung has already committed about 20 billion yuan to six developments in Tianjin, Shenyang, Changsha, Wuxi and Jinan. Mr Ng declined to give more details. However, BNP Paribas Securities (Asia) analyst Manfred Ho said in a report the company expected to conclude two projects in Changsha this year. BNP Paribas and Deutsche Bank have lowered their full-year earnings estimates for the developer by 5 per cent and 6 per cent, to HK$3.2 billion and HK$3.6 billion respectively, citing its slow property sales strategy in Hong Kong. For the six months to December, Hang Lung's operating profit from property sales dropped 60 per cent to HK$109.2 million from a year earlier on sales of 170 units. But the sharp decline in sales was offset by strong rental income growth in Hong Kong and Shanghai, and underlying profit in the period slipped just 2.2 per cent to HK$860.7 million on year. Mr Ng said that Hang Lung would have plenty of residential units ready to sell once demand had built up in the market. 'But now is still not the time to sell,' he said. 'We are not in a rush since we are in a net cash position.' As of December the company had 3,051 residential units worth HK$20 billion ready to sell. At HarbourSide, its luxury residential development at Kowloon Station, 877 units remained unsold. Hang Lung's strategy is to improve profit margins by achieving higher selling prices, not by increasing volume. 'When we receive an attractive purchase offer, we'll see,' Mr Ng said. 'We sold one HarbourSide unit for HK$20,000 per square foot just two weeks ago.' He said Shanghai properties were contributing one-third of the company's total rental income. For the six months to December, its total rental income reached HK$1.13 billion, up 15 per cent from a year ago. Currently, the company's only new projects are in Shanghai - shopping mall The Grand Gateway and Grade A office-retail complex Plaza 66. Mr Ng said that over the next few decades, as Hang Lung's shopping mall projects arrive at completion, rental income would grow substantially. The company's first malls outside Shanghai and Hong Kong are not expected to contribute rental income until 2010.