Hong Kong-listed property company Chinese Estates Holdings is likely to get back to bringing new projects to the market once talk of prospective offers for the company from undisclosed bidders comes to a widely expected end without producing an agreement. However, expect more property developments to be pursued on the mainland - and Macau especially - as the company seeks to beat shrinking margins at home and venture further afield in search of better returns. News that the company was the target of undisclosed bidders was first reported by the South China Morning Post on July 3 and confirmed in an announcement by the company to the Hong Kong stock exchange on the same day with the caution that the talks were confidential and preliminary and may not lead to an offer being made. There had been no further progress of the talk by yesterday. So for now at least, it looks like it is back to basics for the company controlled by Joseph Lau Luen-hung who, together with family members, holds 53.93 per cent of the firm's issued capital. Speaking before the announcement earlier this month Mr Lau's son, Lau Ming-wai, told Property Post that the lure of larger returns would increasingly lead Chinese Estates into the mainland. 'As a rule of thumb, Hong Kong property development projects provide a gross profit margin of about 20 per cent at best, while we aim for 30 per cent or above for our projects in Macau and the mainland,' said Mr Lau, 27, an executive director of the company and the heir apparent to his father as chairman and chief executive. As a result, while Chinese Estates had actively sought to diversify its investments and generate stable income from the leasing of investment properties in Hong Kong, it would focus increasing attention on Macau and the mainland for new property developments. Helping this drive offshore were concerns that the investment risk of undertaking new developments in Hong Kong was on the rise, since land prices were 'not cheap', Mr Lau added. 'Take opening a factory as an example. In this case it's a question of whether the prices of the factory's products can cover investment costs or not. In other words, for developers it's a case of whether they can pass on the higher cost of land to buyers without negative consequences for demand.' Chinese Estates acquired three development sites in Chengdu last year - its first foray into the mainland property market. It plans to develop two residential projects and a commercial-retail project on the sites, and to bring the residential projects to the market in 12 to 24 months. High-end property prices in the city centre range between 7,000 and 8,000 yuan per square metre, said Mr Lau, while property prices in suburban areas were between 5,000 and 6,000 yuan per square metre. He said prices could rise by 7 to 10 per cent in the next 12 months. Since there is a shortage of grade A office space in Chengdu, demand for commercial properties is expected to be strong and the firm will hold its commercial-retail project for longer-term investment. In Hong Kong, the developer's focus will fall on selling the remaining units of Miami Crescent in Sheung Shui, the Zenith in Wan Chai, and Indi Home in Tsuen Wan in the first half. The 652-unit Zenith has found buyers for more than 40 per cent of units since its launch last year. In the second half, the company will consider launching a redevelopment project at Reclamation Street in Mong Kok and its first residential project in Macau, Mr Lau said. Sales of the Mong Kok project may be booked in this financial year. However, he cautioned that sales revenue might not be as strong as last year, because a greater number of residential projects were completed during that year. The aborted plans to privatise the company announced last month were due to 'unreasonable' proposals submitted by institutional shareholders, said Mr Lau, including a suggestion that the company raise debt in order to fund a dividend payout. 'That might sound like a good idea in the short term while interest rates are low and funding is readily available. But the company will suffer once interest rates go up or inflation rises in the future,' he said. Since the withdrawal of the privatisation bid, the company will focus on its core operations and put on hold plans to launch a property trust in Singapore. 'The reit market in Singapore is attractive as it is mature and the products offer reasonable yields,' he said. 'The reit market in Hong Kong is not sponsor-friendly and we will have to look into whether a trust will be popular here or not.'