Cyberport Opens With Three Tenants

by Mary Swire, Tax-News.com, Hong Kong

08 April 2002

Phase one of Hong Kong's much vaunted Cyberport development opened last week with just three tenants occupying about half of the project's 353,000 square feet. The Government last year made much of the fact that fifteen supposed 'anchor' tenants had signed letters of intent, and is still claiming that about 30 of the 80 companies that had applied for tenancies wanted to move in during the first phase.

Salomon Smith Barney analyst real estate analyst Robert Fong said in a briefing note last week that some of the letters signed by prominent information technology (IT) companies "were signed by the United States-based PR people rather than HK-based operations people".

The 15 companies that signed letters of intent are: Microsoft, Cisco Systems, CMGI, Hewlett-Packard, Hikari Tsushin, Hua Wei, IBM, Legend Holdings, Oracle, Portal, Silicon Graphics, Softbank, Sybase, Yahoo! and Pacific Convergence (a subsidiary of Pacific Century CyberWorks).

The Government and PCCW, its joint-venture partner, have repeatedly stressed the value of the 15 letters of intent as evidence of support for the controversial project. "The letters of intent are not even legally binding," Mr Fong said.

Information Technology and Broadcasting Bureau deputy secretary Annie Tam Kam-lan agreed the letters of intent were not legally binding but said they had never been presented as such. They were expressions of support for the project, she said.

Construction of the Cyberport commenced in May 2000 and it will open in phases between now and the end of 2003. It is serviced by a state-of-the-art telecommunications infrastructure, supported by offices and accommodation of "a world class standard", says the goverment. The environment is campus-like and aims to attract a cluster of companies specialising in areas of information technology, information services and multimedia. Cyberport consists of a mixture of commercial and residential accommodation. Under the terms of the joint venture, CyberWorks is building the Cyberport residential and commercial buildings and will split with the Government the proceeds from the sale of the residential units. The Government fully owns the commercial premises and receives all the rental income.

ING property analyst Eva Lee told the South China Morning Post that the combined rental price and management fee at Cyberport in Pokfulam was about HK$16 per square foot - the same as most IT firms were already paying in Quarry Bay or Kwun Tong. She did not think anyone would want to move to the outskirts of the central business district, especially IT companies whose costs were huge when it came to a relocation.

Recommended