The government has attempted to offer incentives to the sector with tax changes, but there is no sign yet that this is having an effect, with the price war between major residential developers intensifying in recent days. This week Henderson Land Development offered discounts of about 11% on flats at Metro Harbour View in Tai Kok Tsui, while Cheung Kong has offered an even lower price on units at its Banyan Garden estate.

With the market on its back, most of the smaller property subsidiaries are trading at such a deep discount to net asset value that it must be tempting for their owners to try to take them private or restructure them into larger, more viable units, in anticipation of an eventual upturn in property prices.

Recently, it has seemed that this process may be beginning, with a restructuring announced last week by New World Development, an offer this week from New Asia Realty and Trust Company, a division of Wheelock, for its subsidiary, Realty Development Corporation, and a privatisation bid by Henderson Land for its subsidiary, Henderson Investment.

Not surprisingly, the minority shareholders who are invited to surrender their lowly-rated paper in such deals are scarcely happy. Shares in Wheelock and its subsidiary plunged yesterday when they resumed trading after a seven-day suspension. New Asia shares fell 8.16% to HK$2.25, while Wheelock closed down 6.84% at HK$5.45. Analysts pointed out that while the deal will only slightly enhance Wheelock's net asset value - by less than 1.5% - net gearing would rise from about 38% to more than 41%.

In the case of Henderson, minority shareholders Templeton Asset Management and David Webb forced Henderson Land to raise its offer price by 3.4% to HK$7.60 per share; but after its AGM yesterday Henderson Land's vice-chairman Colin Lam Ko-yin said the offer was fair, at a discount of about 30% to net asset value, pointing out that other companies had made privatisation offers at up to 80% below NAV. Minority shareholders will vote on the deal on January 2, with 75% support required for the offer to go ahead.

The New World restructuring has also come in for flak, with investors in Pacific Ports unhappy that their company is being made to buy heavily indebted New World Infrastructure, taking it from a net cash position to a debt-to-equity ratio of 73.8%. Parent New World Development says it is turning Pacific Ports, a small and illiquid company, into one of Asia's leading infrastructure, ports and services concerns, but analysts don't agree that the deal makes financial sense.