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Ruckus over family ties not holding developer back

HONG KONG: For Hong Kong property developer Tony Yau Tang-tit, being the brother of a senior government official can have its drawbacks.

This was certainly the case last year when Common Empire Development, of which he is an executive director, was in the spotlight over accusations that it benefited from possible advance information about a government plan to revitalise the city's industrial property market.

Since Tony Yau is the younger brother of Secretary for Environment Edward Yau Tang-wah, critics questioned a purchase the company made before Chief Executive Donald Tsang Yam-kuen's announcement, in his October policy address, that 1,000 industrial buildings would be revitalised.

A week later, the environment minister was forced to issue a public statement saying his brother's firm had completed the purchase a year before the policy speech and could not have known about the government's plans.

Tony Yau, who said he had no shares in Common Empire, had strenuously denied the allegations, adding that the issue had been politicised. He said it had not upset him or affected his relationship with his brother.

Meanwhile, Common Empire is continuing its acquisition spree in a bid to build up a portfolio of hotel properties and serviced apartments.

In May, the firm bought another old residential building in King's Road for HK$420 million (RM169.63 million). The site has a 15-times plot ratio — the formula that determines a site's density, or permitted floor space as a multiple of the site area — which means if the building was demolished it could be rebuilt with 200 serviced apartments of 900 sq ft each.

If the company decided just to renovate the building, Yau said it would only provide 100 units of between 300 sq ft to 400 sq ft each. No final decision has been made, he said.

The firm currently owns three boutique hotels, under its home-grown Butterfly brand, with a total of 290 rooms — the 122-room Butterfly on Prat in Tsim Sha Tsui, the 98-room Butterfly on Morrison in Causeway Bay and the 80-room Butterfly On Wellington in Central, which is expected to open as early as next month. The average occupancy rates of the two hotels currently in operation is close to 90%.

"Since the number of tourist arrivals rebounded in the second half of last year, average room rates in general have increased by 10% from a year ago," Yau said.

As well as the Butterfly chain, the company is also looking at economy hotels. It will open its first 550-room "economy hotel" in Sheung Wan in the middle of 2012.

Common Empire has spent about HK$800 million or less than HK$4,000 per sq ft to develop the 14,500 sq ft Sheung Wan site at 18-30 Des Voeux Road West and 68-74 Bonham Strand West, over the past year. It will spend another HK$800 million to complete the 33-storey hotel.

"The challenge of buying a site, particularly those involving buildings more than 30 years old, is locating the owners. Some of them no longer live in Hong Kong and just let their run-down properties become empty. We spend a lot of time and effort tracking them down and persuading them to sell to us," he said.

But the effort has paid off.

Given today's soaring property prices, Yau said, land values have been going up accordingly.

He helped the company make a short-term gain of HK$185 million earlier this year from the resale of two old five-storey buildings in Kimberley Road, Tsim Sha Tsui, less than a month after the firm completed buying them.

The buying process took five years. — South China Morning Post
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