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Cheung Kong wins HK$7b MTR property project

(HONG KONG) Cheung Kong (Holdings), the property flagship of tycoon Li Ka-shing, has won a tender from Hong Kong subway operator MTR Corp Ltd to develop a residential project with an investment cost of HK$7 billion (S$1.29 billion).

MTR said in a statement that it would sign a formal agreement with Cheung Kong for the third phase of the Lohas Park project in Hong Kong’s Tseung Kwan O district within the next few weeks.

Property prices in Hong Kong have jumped more than 70 per cent since a trough in 2003, when the Sars respiratory disease ravaged the city’s economy.

Some analysts expect prices to rise another 50 per cent in the next two years because supply of apartments is falling short of demand at a time when Hong Kong is mimicking US interest rate cuts.

But if prices fail to meet those expectations, developers could see their margins squeezed because of soaring land prices at recent auctions.

Cheung Kong could cut costs in its new project as it is also developing the first two phases of Lohas Park, said Charles Chan, the managing director of Savills Valuation and Professional Services.

‘They can duplicate the design and lower labour costs,’ he said.

The first phase of the Lohas Park is selling at HK$5,000-6,000 per square foot, but Cheung Kong could lift prices by as much as 40 per cent for the third phase, Mr Chan said.

‘The third phase could ask for HK$7,000-8,000 a square foot when it is ready for sale three years later,’ he said.


Source: Reuters (Business Times 29 Nov 07)


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