Property Development and Holdings

The Group's property activities include the development and sale of high quality residential, commercial and recreational projects in Hong Kong, the Mainland and overseas. An investment portfolio comprising approximately 10 million sq ft of commercial, industrial and residential premises provides steady flows of recurrent income.

Profit from the property division, after a provision of HK$750 million against the Group's property development at Wan Hoi Street, totalled HK$1,628 million (1996 - HK$1,409 million) which arose mainly from rental income and the sale of properties and carparking spaces.

Hong Kong - Property Sales

During the first half of the year the Group disposed of its interest in a 24 storey office block on Chiu Lung Street in Central and also sold the Park Commercial Centre in Causeway Bay. The latter is being redeveloped into a hotel for the new owner. In addition, a total of 2,763 carparks were sold during the year.

Hong Kong - New Acquisitions and Properties Under Development

Steady progress was made with the Group's projects under development in Hong Kong. The superstructure work on Cheung Kong Center is progressing on schedule, with the first 25 floors of the 62 storey office tower expected to be ready for occupancy during the fourth quarter of this year. The tower, which is scheduled for completion by the end of this year, will provide approximately 1.27 million sq ft of gross floor area as well as extensive underground parking. Once the tower is completed, construction will start on the second phase of underground parking, which will replace the existing above-ground parking facility. Cheung Kong Center, which will include 1,050 carparks, will be one of Hong Kong's most intelligent buildings. A leasing campaign is underway and the response to date has been encouraging.

Construction of the Group's 39% owned North Point twin-tower office and hotel is progressing satisfactorily, and when completed in 1999 it will provide 212,000 sq ft of office and commercial space and approximately 700 hotel rooms and suites. A 672,000 sq ft residential and commercial complex is currently planned for the recently acquired building site on Wan Hoi Street in Hung Hom adjacent to the Harbour Plaza Hotel. The Group has a 50% interest in the development, which is expected to be completed in 2001.

Foundation work is on schedule for a 1.4 million sq ft commercial project above the Kowloon-Canton Railway Terminus in Hung Hom. The Group has a 25% interest in this project, which will comprise three office towers, a 1,000 room hotel and a shopping arcade when completed in 2000.

The phased development of the 2.68 million sq ft residential complex above the Mass Transit Railway Station at Tsing Yi is on schedule. The first phase comprising five towers with 1.15 million sq ft of residential space is expected to be completed this year. The second phase comprising seven towers with 1.53 million sq ft of residential space is due for completion in 1999. The Group has a 60% interest in the consortium that is developing this project.

Construction of a 132,000 sq ft residential project in Tai Po, in which the Group has a 35% interest, is progressing satisfactorily and is scheduled to be completed this summer. A 1.39 million sq ft residential project at Ma On Shan, in which the Group has a 50% interest, is expected to be completed in 1999, as is a 50% owned 229,000 sq ft residential project on Broadcast Drive.

At Tung Chung, the Group successfully applied to increase the plot ratio of its 25% joint venture residential and commercial complex near the new Hong Kong International Airport. On schedule for completion in 2001, the development will provide approximately 4.4 million sq ft of residential units and a shopping centre.

Hong Kong - Rental Properties

The Group's portfolio of approximately 10 million sq ft of commercial, industrial and residential investment properties remained virtually fully let, providing a regular flow of quality recurrent income. Net rental income grew approximately 6% during the year.

An additional 12,882 sq ft of retail space with 40 carparks at Baguio Villa was acquired during the year mainly for the use of Park'N Shop, which is part of the Group's retail division.

Mainland China - Properties Under Development

Beijing

Foundation work has begun on Beijing Oriental Plaza, which, when completed, will provide over six million sq ft of office and retail space as well as a hotel and service apartment complex. The shopping mall is expected to open in 2000.
(The Group has an 18% interest in this project)

Chongqing

The 957,000 sq ft shopping podium of Metropolitan Plaza, which has attracted several major anchor tenants, was officially opened and is virtually fully let. Construction of the complex's luxury hotel and office tower, which together will comprise a further one million sq ft of space, is on schedule and is due for completion this year.
(The Group has a 40% interest in this project)

The first phase of a low-cost housing project in this city was completed, with work on the 898-flat second phase also expected to be completed this year.
(The Group has a 50% interest in this development)

Guangzhou

The Group is awaiting delivery of the site atop the Huangsha Metro Station, which is now in operation. Construction of this project will be done in phases over a period of several years and, when completed, will comprise approximately 1.3 million sq ft of residential and 531,000 sq ft of commercial space.
(The Group has a 45% interest in this project)

Twenty-two residential units in the Greenery development at Tianhe were sold during the year.
(The Group has a 65% interest in this project)

Qingdao

Construction of Pacific Plaza is underway on the second phase of this development, which comprises five residential tower blocks with a total floor area of 485,000 sq ft. Two of the towers are due for completion this year, and construction of the remaining three is expected to commence in 1999. The first and second phases of the development will provide a total of 847,000 sq ft of commercial and residential space.
(The Group has a 30% interest in Phase 1 and a 15% interest in Phase 2 of this project)

Shanghai

The 687,000 sq ft Westgate Mall, on Nanjing Road West in the Jing An district, was successfully opened last summer, with a range of quality anchor tenants. An office tower providing 367,000 sq ft of space atop the mall was also completed.
(The Group has a 21% interest in this project)

Construction is expected to start this year on the second and third phases of the 1.6 million sq ft urban development in the district of Xuhui. When completed, the overall project will comprise four residential towers, an international school and an office/hotel tower. It is expected that the project will be completed in 2001.
(The Group has a 39.2% interest in this project)

Construction of 96 houses constituting the first phase of a low density housing development in Huamu, district of Pudong, continued on schedule, with completion expected this year. Construction of the second phase will begin when the units in the first phase have been substantially sold.
(The Group has a 50% interest in this project)

Zhuhai

Planning work is in progress for Phase 1 of a project comprising 75 houses.
(The Group has a 35% interest in this project)

Overseas - Properties Under Development

Grand Bahama Island

The Group is in the process of redeveloping a resort hotel complex together with associated golf courses on the island. Work on this project has commenced, with completion scheduled for early 2000.

London

Construction of the Group's 47.5% owned Royal Gate Kensington development is on schedule. The remaining 61 flats in this 132 unit development are scheduled to be presold this spring. Planning and design work have been completed for the Group's 50% owned residential site near Sloane Square, with construction expected to begin this year. The Group also acquired a 45% interest in a site near the Albion and Bridge Wharves on which a residential and commercial development is to be constructed. This project is currently going through the planning permission approvals process.

Tokyo

The Group acquired a 45% interest in a site, adjacent to the Tokyo Station Yaesu South area, on which is to be constructed a high-rise office tower. As a result of a recent agreement with East Japan Railway Company on merging an adjacent strip of land with this site, an enlarged office tower containing approximately 800,000 sq ft is planned for the location and design work is underway. The project is expected to be completed in 2000.

Singapore

The Group acquired a 24% interest in a site which is being developed into a 1.5 million sq ft residential complex. Completion is expected in 2001.