Henderson Land Development Chairman Lee Shau-kee yesterday said that the financial crisis will continue to take its toll on the local property market next year despite that the market slowdown benefits the company in paying a lower land premium. The tycoon took a cautious outlook for the market in 2009.

"As the Sun Hung Kai Properties' newly-released project has received encouraging response in recent weeks, I believe the price (property) won't take a downswing," Lee said.

"However, the overall market will remain sluggish throughout the first half next year. The market's long-term recovery depends on the economic condition," he said.

Henderson Land Development earned HK$24 billion in sales revenues last year. The company's vice chairman, Colin Lam, said that the sale revenues for the first half amounted to a couple of billion, but he refused to make a full-year sale forecast in view of the market uncertainties.

Lam, however, said the financial turmoil did not hurt the company notably since it neither made a bid for new land nor released new projects aggressively this year.

He added that the decline of property price enables the company to pay a much-lower land premium.

Henderson Land Development currently has a total of 34 million sq ft in agricultural land reserve. Lee earlier revealed that the company is in discussion with the government over land premiums for projects such as Wu Kai Sha, worth about HK$10 billion.

Talking about the stock market, Lee said he was not pessimistic as it is normal for the market to move from the highs to the lows and vice versa. However, he admitted that it was hard to predict the market trend.

Although the Hang Seng Index rallied over 1,100 points yesterday, Lee shied away from giving "stock tips" to investors, noting that some investors had grumbled after taking his words to purchase loss-making shares.

Although the portfolio of the group's investment vehicle, Shau Kee Financial Enterprises, has lost value significantly, Lee said he isn't keen on bottom fishing at this stage. He was confident that the company will regain lost ground in the future.

About Hong Kong and China Gas Co, Lee said that the gas distributor has made progress in exploring the mainland gas market, where the company has 69 natural gas projects.

The tycoon said the mainland's economic growth can stay above 8 percent a year, boosted by the measures by the central government.

Separately, Lam said that the company is considering increasing investment in Hong Kong Ferry (Holdings) - the group's travel and property affiliate.

He also added: "The company has about HK$500 million cash in hand. Together with its soon-to-be released project on Sycamore Street, the company is expected to generate strong cash flow."

Lam said that Henderson Investment intends to sell infrastructure assets to its mainland shareholder. The talks over the deal are still in progress, he said, adding the company will study the possibility of privatizing Henderson Investment when the deal is completed.

(HK Edition 12/09/2008 page2)